by Ruckertax | May 9, 2014 | College, Frequently Asked Questions |
TABLE OF CONTENTS What types of tax relief are available for costs of my children’s higher education? What is the education tax credit? Do any tax planning considerations apply to the education tax credit? Do living expenses while in school qualify for tax relief? How does a Coverdell (Section 530) program work? How can my family make best use of a Coverdell (Section 530) program? What are qualified tuition programs? How do Coverdell Section 530 plans and qualified tuition Section 529 plans differ? Can my traditional IRA be used for education? Can a Roth IRA be used for education? What tax deductions are available for college education? What tax benefits are available for continuing/adult education for a hobby or a sideline? Can I deduct student loan interest? If I take a home equity loan to pay education expenses, can I deduct the interest? What tax treatment applies if my student loan debt is canceled? What’s the tax relief for education savings bonds? Must I pay tax on my employer’s payment or reimbursement of my education expenses? Can I take tax deductions from education I pay for that helps me in my work? WHAT TYPES OF TAX RELIEF ARE AVAILABLE FOR COSTS OF MY CHILDREN’S HIGHER EDUCATION? A wide variety of tax relief is available, but you’ll need to choose which credit or deduction to claim or which savings plan to use based on your individual tax situation. You also can’t use two different kinds of relief for the same item. For instance, you can’t take the higher education credit and tuition fees deduction for the same student for...
by Ruckertax | May 9, 2014 | College, Parenting |
Various tax benefits, including tax exemption, tax deferral, tax credits, and deductions, are available if you are paying or saving for college or other higher education costs. This Guide suggests ways to take advantage of these benefits. TABLE OF CONTENTS Coverdell Education Savings Accounts (Section 530 Programs) Qualified Tuition Programs (Section 529 Programs) Traditional and Roth IRAs Education Savings Bonds Education Credits Qualified Tuition and Related Expenses Deduction Employer-Provided Education Assistance Student Loans Many tax benefits are available to help you pay higher education costs, whether for your children or yourself. Because of the variety of benefits and programs, this area is one of the most complex that an individual can face. This Financial Guide discusses strategies you can use to build savings for higher education, and tax credits currently available to help ease the financial burden of paying for education. Eligibility rules vary for education credits and savings plans and most are subject to income limitations. Related Financial Guide: For more information about saving and investing to cover education costs, please see the Financial Guide: YOUR CHILD’S EDUCATION: How To Finance It. COVERDELL EDUCATION SAVINGS ACCOUNTS (SECTION 530 PROGRAMS) Starting in 2013, you can contribute up to $2,000 to a Coverdell Education Savings account (a Section 530 program formerly known as an Education IRA) for a child under 18. These contributions are not deductible, but they grow tax-free until withdrawn. Contributions for any year, for example 2013 can be made through the (un-extended) due date for the return for that year (April 15, 2014). Note: There is no adjustment for inflation; therefore the $2,000 contribution limit is expected to remain at...
