Parents should consult their tax advisor when filing their federal income tax. Laws now provide special benefits to help parents pay for college.
The National Association of Student Financial Aid Administrators offers information on these credits at:
http://www.nasfaa.org/redesign/taxbenefitsguide2009.html
Hope Scholarship Credit
This credit is available to students who are enrolled at least half-time and have not completed the first two years of an undergraduate program. Your family must file a tax return and owe taxes. Taxpayers will be allowed to claim a credit of up to a maximum of $1500 per student per tax year.
Lifetime Learning Tax Credit
A tax credit is available to college juniors, seniors, graduate and professional degree students enrolled at least half-time who do not qualify for the Hope Scholarship or have used their two years of Hope Tax Credit eligibility. Your family must file a tax return and owe taxes. The tax credit cannot exceed 20% of $5,000 of qualified tuition and required fees paid with a maximum limit of $1,000 per taxpayer return.
Student Loan Interest Deduction
Last year saw changes to the Taxpayer Relief Act of 1997 that will benefit those who qualify for the interest deduction. First, the 60-month limit was removed, allowing the interest deduction to continue after five years of repayment. Next, the income cap for eligibility was raised. People whose modified adjusted gross income is under $65,000 (previously $40,000) are now able to take a deduction. Married persons filing a joint return may take a deduction if their modified adjusted gross income is under $130,000 (previously $75,000).
