RateNerd » College Savings

2011 and 2012 Tax Credits For College

Rate Nerd — Fri, 03 Feb 2012 14:16:42 +0000

Slash your college bills with tax credits

Other than buying a home and automobile, a college education is one of the biggest investments Americans typically make.

On average, in-state tuition and fees at a four-year public college increased by more than 8 percent to $8,244 for the 2011-2012 academic year, and room and board now averages more than $17,000 per year.

Fortunately, you may be able to cut your college costs at income tax time with a variety of credits, deductions and savings plans.

The American Opportunity and Lifetime Learning Credits are likely to result in the biggest tax rewards on your tax year 2011 federal return due April 17, 2012. The following basic requirements apply to both credits:

Filing status on the return cannot be “married filing separately.”
The student must be you, your spouse or a dependent for whom you claim an exemption.
A dependent cannot claim the credits if claimed on another person’s (e.g. parents’) return.
If you do not claim the dependent exemption (even if entitled to the exemption), you cannot claim a credit based on that dependent’s expenses.
Claim credits on Form 8863 and file with your Federal 1040.

In addition, both credits cannot be claimed for the same student. If multiple students are claimed on a return, the taxpayer should choose the credit that yields the biggest benefit for each student.

The American Opportunity Credit is a modified version of the Hope Credit. It’s worth up to $2,500 for tuition, fees and course materials per student for the first four years of postsecondary education. Even if you have zero tax liability, you can get up to 40 percent as a refund. It phases out at higher incomes.

The Lifetime Learning Credit is worth up to 20 percent of the first $10,000 in higher education expenses per family for an unlimited number of years. Like the American Opportunity Credit, it phases out at higher incomes.

Several other college and higher education tax breaks can also be claimed on this year’s federal tax returns.

Up to $2,500 in student loan interest paid each year for qualified higher education expenses can be deducted, even if you don’t itemize. The deduction phases out at higher incomes and is reduced by nontaxable distributions from a Coverdell Education Savings Account, savings bond interest used for education expenses and scholarships or veteran’s education benefits. Married taxpayers filing separately and people claimed as a dependent on another return don’t qualify.

Additional exceptions may apply to the aforementioned tax breaks, and other educational tax benefits exist for Qualified Tuition Programs, student loan cancellations and repayment assistance, Coverdell Education Savings Accounts, education savings bonds, employer-provided educational assistance and work-related education. Learn more about all education tax benefits in Publication 970 at www.irs.gov.

2011 and 2012 Tax Credits For College is a post from: RateNerd - unadvertised deals from banks.

New Obama Student Loan Plan Details

Rate Nerd — Thu, 27 Oct 2011 23:08:04 +0000

President Obama unveiled a plan Wednesday that will ease the burden of student loan debt for millions of student loan holders.

The plan will accelerate an existing plan to cap student loan payments at 10% of income to start in 2012 instead of 2014. It will also allow those with split loans from the Direct Loan program and the Family Education Loan Program to consolidate their debts into a single monthly payment. Borrowers that opt for this plan will get a 0.5 percentage point cut in their interest rate.

Obama’s plan will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. He will put it into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.

He will also allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million student loan borrowers.

The presidents plan will not impact borrowers with private loans for college. For private student loans to be reconsolidated under the Federal student loan program, an act of Congress would be necessary.

Student loans are the No. 2 source of household debt.

The president’s announcement came on the same day as a new report on tuition costs from the College Board. It showed that average in-state tuition and fees at four-year public colleges rose $631 this fall, or 8.3 percent, compared with a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high.

The White House said the changes will carry no additional costs to taxpayers.

Last year, Congress passed a law that lowered the repayment cap and moved student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.

Today, there are 23 million student loan borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.

New Obama Student Loan Plan Details is a post from: RateNerd - unadvertised deals from banks.

Credit Card Advice For College Kids

Rate Nerd — Tue, 13 Sep 2011 15:30:11 +0000

Heading to college with a credit card this fall?

Whether it’s your first year in school or your last, you probably already have some expectations about how things will go. Freshmen may be dreading the infamous weight gain, sophomores and juniors may be happy to be a year closer to graduation, and seniors will look forward to finally getting a degree.

It’s probably safe to say, however, that you’re not planning on racking up a lot of credit card debt as you go through college. Unfortunately, that’s exactly what happens to many college students.

The average credit card debt for college seniors is $4,100, according to a 2009 study by Sallie Mae. Eighty-four percent of college kids have at least one credit card, and the average balance for all college kids is $3,173, the study showed.

If you haven’t already been offered a credit card while at college, chances are you will be. More than three quarters of college students say credit card companies have marketed to them through tables set up on or near campus, one U.S Public Interest Research Group study showed.

While that offer of a free iPod just for applying may seem like a great deal at the time, don’t forget your credit card application will affect your credit report. Credit bureaus track new credit applications as part of their reporting process. Total available credit and number of credit inquiries are also factors in determining your credit score.

If you’re thinking about getting a credit card for college, keep these tips in mind:

Check your credit report and score first. Websites like RateNerd.com allow you to view your credit score, which is a snapshot of your credit history and status. The site’s Credit Score Center can help you understand how your score works, how it’s calculated, what factors impact it and when is the best time to apply for credit.

Be skeptical and inquisitive about credit card offers. Be sure you understand the terms and conditions that will apply to your new card. That zero percent interest rate for the first 12 months may sound great, but will the rate leap to 30 percent if you’re a day late making a payment?

If you don’t already have one, open a checking account first. Consider making it a joint account with a parent. You’ll need that account to pay your credit card bill, even if you pay online and never write a check. Setting up automatic payments online can be a great way to ensure your payments are never late or missed. Make sure you also have a high yield savings account like Discover Bank High Yield Savings Accounts.

Avoid using your credit card for consumables. For example, it makes sense to use credit to buy a new laptop; it will allow you to divide the cost into smaller, manageable payments that you can make over a few months. It doesn’t make sense to use credit to pay for a tank of gas or lunch at a fast-food joint. The debt will linger longer than the item you purchased.

*If you can’t afford to pay off a purchase in a couple of months, you probably can’t afford that purchase at all. Only use your credit card for items you know you can pay off quickly, because the longer you carry the balance and pay interest, the more expensive the item becomes.

A credit card can be a useful tool to help you through your college years. Just be sure to follow good credit use practices to ensure student loans are your only debt once you graduate.

Credit Card Advice For College Kids is a post from: RateNerd - unadvertised deals from banks.

Paying For College – College Savings Accounts, Student Credit Cards

Rate Nerd — Wed, 04 May 2011 12:52:37 +0000

Use these two Tax Free College Savings Accounts To Fund Your Child’s Education, and use this student credit card to let them buy books (or beer and pizza…).

When it is time for your children to go to college, they will need a lot of money. The cost of education is rising year by year, a factor that makes it very difficult for you to fund your child’s education.

But you can easily give your child a college education if you make the necessary financial preparations for it when your child is very young. You can do so by starting an educational fund and letting it grow. The best solution for you is a tax free savings account for your child’s college education.

529 College Savings Account

You can use any of the several tax free savings accounts available to raise a fund for your child’s education. The 529 account is immensely popular.

You have to pay taxes for the money you deposit in a 529 account. But you don’t have to pay annual taxes on the interest, and you are not taxed for the money you withdraw from a 529 account on condition that you use it only to meet your child’s educational expenses such as books, tuitions, housing , and so on.

In a 529 account, the maximum annual amount you can deposit is $200,000. You need a money manager to handle the funds you contribute to a 529 account. The biggest advantage of this plan is that the money in the 529 plan is the property of the owner of the account. If the parents of the kid set up this account, the kid stands a better chance of getting the required financial help.

If one of your children is averse to a college education, you could spend that money on another of your children who might long for an education.

Coverdell Education Fund

The Coverdell Education Fund is yet another tax free savings account to raise funds for education. Basically, it is the same as the 529 plan, but with a few differences.

The maximum amount you can deposit per year in a Coverdell Fund is only $2000, which won’t be insufficient if you have begun saving for your child’s education very late in life. However, you don’t need a money manager here, and you are in total control of your Coverdell Fund.

The biggest disadvantage is that the Coverdell Fund belongs to the student, which he or she can misuse and therefore, get lesser financial aid. Your child owns the money that you put in a Coverdell account and gains complete control over it once he or she turns 21. Children could misuse this money and spend it on things other than their college education. This won’t happen in a 529 plan.

You are the best person to decide which is the best type of tax free savings account to fund your child’s college education. Education is expensive, and to give your child the best there is, creating a fund at the earliest possible is absolutely necessary.

Discover Student Cash Back Credit Card

This credit card is desinged for students and helps them to learn the responsible use of credit. Here’s why the Discover Student Card is the simple solution for building your student’s credit:

Easy online account management (Personal E-mail Reminder; Paperless Statements; Online Bill Payment; Online Cashback Bonus Redemption)
Cashback Bonus on every purchase
$0 Fraud Liability
24/7 Customer Service
Choose the card design that fits your style

Discover also has a great offer for new student card holders:

A $20 Cash Back Bonus with first purchase
No annual fee
0% intro APR for 7 months on purchases, then the standard variable purchase APR of 12.99% – 19.99%

Discover Student Card with $20 Cashback Bonus

Paying For College – College Savings Accounts, Student Credit Cards is a post from: RateNerd - unadvertised deals from banks.

Understanding 529 College Savings Plans

Rate Nerd — Mon, 29 Nov 2010 15:06:17 +0000

What’s the best way to save for your child’s education?

Figuring out how to pay for college may be more daunting than completing the course work it takes to graduate.

If you’re a parent or grandparent, you’ve likely considered the question of how to pay for your family’s education, and it’s possible that answers have not been easy to find.

Almost everyone wants to contribute financially to their children’s or grandchildren’s education, according to The Hartford’s fifth annual college savings survey. However, only 64 percent of respondents are aware of tax-efficient ways to save. With many college saving options available, determining which ones are best for you and your family can be confusing.

529 plans are a great option for tax-advantaged savings. A 529 plan allows you to make investments with earnings that are tax-exempt when they are applied toward eligible higher education expenses. However, a 529 plan will count as a parents asset which gets factored into your “Expected Family Contribution” or EFC – this is the amount the colleges expect you to contribute to your child’s education. The nasty suprise is when you have more than one child – for EFC purposes they will consider the entire amount in your 529 plan as money that can be spent on the first child going to college. So if you have four kids, and have $10,000 saved for each one, the colleges will consider you have $40,000 put away that can be used for the FIRST child who attends. This can have a big impact on your ability to get needs-based aid, so be careful.

If you are in the process of developing a college savings plan for your children or grandchildren, it’s always a good idea to talk to your financial advisor. If you’re confused about college savings options, particularly about 529 plans, you are not alone. The Hartford survey found that 43 percent of parents and grandparents don’t fully understand this investment tool. Before you talk to your advisor, here are the answers to some frequently asked questions about 529 plans.

How much can you contribute to a 529?

Many states allow the account owner to take a state income tax deduction for contributions made to their plan each year. The amount of the deduction varies by state, and if you roll the funds to another 529 plan not sponsored by that state, your deduction may be subject to recapture.

Under federal gift tax rules, you can contribute up to $13,000 per year for each beneficiary of a 529 account without gift tax consequences. You can also make a tax-exempt contribution of $65,000, or $130,000 for married couples, per beneficiary, once every five years. If you treat the gift as being made over five years, and die before the end of the five year period, the portion of the gift allocatable to the period after your death will be included in your estate. Any additional gifts given by you to the same Designated Beneficiary in the five year period will be subject to federal gift tax. You should consult with your tax advisor for more information.

How can 529 funds be used?

In addition to tuition expenses, beneficiaries of a 529 plan can use the proceeds to pay for fees, room and board, books and any equipment required for classes at an educational institution. The funds can be used at most two- and four-year accredited post-secondary institutions in the United States, including trade and vocational schools. You may also be eligible to use the funds at a foreign institution.

What happens if I don’t use the funds for education expenses?

The earnings would be treated as ordinary taxable income and could be subject to a 10 percent federal income-tax penalty. Such withdrawals may also have state income tax implications. Certain exceptions are allowed. For example, if your child earned a scholarship and didn’t need the funds to pay for college, withdrawals in the amount of the scholarship would likely come without penalty.

Who can open an account?

Any adult who is a U.S. citizen or resident can open an account. There are no income restrictions. Some accounts have restrictions on the account owner’s state of residency.

Who has control of the account?

The account owner has complete control over how contributions are invested and when withdrawals are made to the 529 plan account.

Who can contribute?

Most plans allow anyone, including friends and relatives to contribute. A 529 contribution is a great way to give the gift of education to a friend or relative who is planning on attending college.

For more information on 529 college savings plans, contact your financial advisor.

Understanding 529 College Savings Plans is a post from: RateNerd - unadvertised deals from banks.

Student Loan Landscape Changes

Rate Nerd — Mon, 20 Sep 2010 14:04:18 +0000

There are some big changes happening in the student loan market.

During the 2009-2010 academic year, the average annual cost of a public four-year degree was $7,020 and for a private four-year degree, $26,273, according to The College Board.

Last week it was announced that Discover Financial Services is acquiring Citigroup’s Student Loan business for $600 million. Separately, Citigroup will buy nearly $8.7 billion in Student Loan’s federal and private student loans and other assets, while SLM will buy Student Loan’s $28 billion of securitized federal student loans and related assets. So, with all these changes, its a good time to understand your student loan and college funding options.

Even though the economy has slowed down, college applications are up. Many people are enrolling in undergraduate programs, some through online colleges and universities, or going back to school for an advanced degree. But, unfortunately, some people don’t consider pursuing a degree because they lack the finances. The costs can be steep.

The good news is there is money out there to help you pay for tuition and room and board — you just have to find it. Here are some tips:

Apply for every college scholarship or grant you can find.

It may seem like a full-time job searching for and applying for scholarships, but the dollars do add up. And they’re free. Start your search early — many scholarships have deadlines. If you’re a high school student, begin with your high school guidance counselor for a list of local resources, and then move on to the college you plan to attend. Educational websites are also good sources for scholarship information — but remember, the information should always be free. Don’t expect large amounts and the competition will be fierce for these scholarships. But smaller awards of $1,000 or less typically have fewer applicants and are easier to obtain.

Plan to earn some extra cash.

Working and going to school at the same time is very common for today’s students. Some are earning money for tuition, others for living expenses. You can apply for the Federal Work Study program, find a job on campus or look for something off campus. Graduate students can look for teaching assistant or research positions, which sometimes offer tuition discounts in addition to a salary.

Apply for federal aid

Student loans are some of the most commonly used financial tools. Use the following steps to apply for financial aid:

1. If you filed an extension for your 2009 taxes, get them finished immediately.

2. Fill out a Free Application for Federal Student Aid (FAFSA form) and submit it as soon as possible.

3. When you receive the Student Aid Report, double check the information, and make corrections if needed. Return the report.

4. You will receive an award letter containing all the details about the financial aid you can receive. Consider your options carefully — look into your anticipated tuition costs, living expenses, and the cost of books and supplies. Reply with your acceptance before the deadline. If you have questions, contact your school’s financial aid office.

Get a private student loan for the rest of your expenses.

Private loans are often used in addition to federal student loans when you find you still need more financing to cover the cost of your education. Many students and parents take more than one loan per single year of school. If a Federal Stafford Loan isn’t enough to cover your student’s full cost of attending school , a Federal Parent PLUS Loan can bridge the gap. When a parent can help financially, we recommend a Federal Parent PLUS Loan before applying for a Certified Private Loan .

– ARAcontent contributed to this article

Student Loan Landscape Changes is a post from: RateNerd - unadvertised deals from banks.

How To Afford College Now

Rate Nerd — Fri, 03 Sep 2010 14:42:43 +0000

Rethinking college because of the cost?

Studies show you’re not alone.

It wasn’t that long ago that a summer job could pay for next year’s college tuition. Now, by working a summer job while you’re in college, you might be able to cover a few credits and a couple months’ rent.

Higher tuition prices are a fact of life for today’s students. Ultimately, they can lead to a student reconsidering or delaying his or her college plans. According to a 2010 survey released by TD Ameritrade, 36 percent of teens today would consider delaying or not going to college due to the expense it requires. This number is up from 31 percent of teens who reported the same in 2009.

“The recent economy has definitely had a profound impact on how we view higher education today,” says Stuart Rubinstein, managing director of investment products for TD Ameritrade. “Education can be costly for those who are not prepared, which is why we recommend taking a proactive approach to education savings.”

While today’s students are concerned about the expenses of college, it doesn’t mean they aren’t willing to save or are dismissing the importance of going to college. Among teens who are saving money, 66 percent are saving to pay for college, compared to 46 percent of adults who were saving as teens, according to the survey. When asked if education was essential to future success, 79 percent of teens said yes, while 57 percent of adults felt the same when they were teens.

For those teens and families trying to save for college, Rubinstein recommends the following steps:

1. Assess the details. Parents and teens should sit down together to analyze their current financial situation, determine what they are capable of saving and compare it with how much they expect the student’s education to cost. TD Ameritrade provides a college planner on its website that can help you determine these goals and find out what college savings options work best for you.

2. Select an education savings vehicle. Compare the benefits of different plans, such as a 529 College Savings Plan, custodial account or Coverdell Education Savings Account, to determine which may be the best fit. Each has different tax implications or withdrawal options, so it’s important to know the details before you enroll. You can find more information on what to expect from college savings plans at www.collegesavings.org.

3. Monitor your financial progress. Ensure your savings plan is meeting your goals by monitoring its progress and making adjustments along the way to stay on track with your goals.

The fact that college is expensive won’t change anytime soon, but by planning ahead, you may be able to make the financial burden that comes along with higher education a little easier to bear.

– Article Courtesy of ARAcontent

How To Afford College Now is a post from: RateNerd - unadvertised deals from banks.

5 Tips For College Students Getting Credit Cards

Rate Nerd — Wed, 11 Aug 2010 13:48:57 +0000

This is the first opportunity you have to establish credit, and if you abuse it now, it will follow you for years to come.

Going to college is, for most students, the first time they’ll feel really independent. And, accordingly, the rest of the world starts treating them like adults too, from the expectations of college professors to the credit card offers that will start flooding in. And just as it’s important to study hard for a major, it’s essential to learn what are the real benefits and repercussions of having a credit card.

Bad credit can affect everything from your ability to get a cell phone, buy a car, rent an apartment, or purchase a house to your chances for getting a job — more employers are now checking the credit history of potential employees before hiring.

To get off to a good start with your credit card, here are five tips to learn — life will test you on them later.

1. Don’t take the first offer you get. Offers will come to your mailbox, appear at stores where you shop and there might even be people from the credit card company on campus, offering cards to passersby. It’s smart to collect as much information as you can about different cards, and then make comparisons. Don’t apply for a lot of cards, as simply applying can in itself hurt your credit, if you do it too many times.

2. Don’t treat it as income. A credit card is not free money, though it sometimes feels like it. Remember that a credit card comes with interest, so if you don’t use it responsibly, you’ll be paying for what you buy — and then some. Credit cards can definitely be convenient, but remember that you should only spend money that you’re guaranteed to have coming in.

3. Remember that there’s no such thing as a free lunch. Those enticing benefits of credit cards — the airline miles, the shopping rewards, the cash-back offers — they aren’t always what they appear to be. It might sound like they’re just a great free benefit of having and using a card, but the true cost of those programs show up in things like annual fees and interest rates. You may be paying for it, one way or another.

4. Be a micro-manager. Having a credit card is a big responsibility, and you need to be active in monitoring your use of it. Keep track of payment due dates — mark it on your calendar, set up an alert on your phone or computer, or enroll in an automatic payment option. If you’re late in making a payment, you might not only have to pay a late fee, but your interest rate will likely skyrocket, making it more difficult to pay off your balance. You should also keep track of your credit score and overall credit health. You can get a free credit report once a year from Equifax, but it’s a good idea to check more than once, so that you know exactly where you stand.

5. Pay attention to the news. Credit card industry changes have a direct effect on you and your card. Recently, Congress passed and President Obama signed into law the Credit CARD Act, which changed the rules of how credit card companies interact with their customers. Not only do they have to limit their marketing efforts on college campuses, but they must also give card holders more advance notice of changes in terms, among other things. Keeping up on the news will help in your financial life, but it’s also a great benefit for your academic life.

When you use a credit card properly, it can be a convenient method of payment, and it can help you to establish your credit history. If you follow these steps, you’ll be starting your financial independence on the right foot. To find out more about credit monitoring and the power of your credit, check out our credit guide “Your Credit Sucks”. And then make sure yours doesn’t.

– Article Courtesy of ARAcontent

5 Tips For College Students Getting Credit Cards is a post from: RateNerd - unadvertised deals from banks.

Save 5% On College Textbook Rentals – Daily Deal

Rate Nerd — Sat, 07 Aug 2010 13:33:18 +0000

Renting college textbooks is cheaper and easier than buying them.

Save 5% off any textbook rental from Chegg – good through August 20, 2010. Click here and use promo code “Aff5″ at checkout.

If you have not heard of them, Chegg is an incredible success story and has built an incredible business in just a few years. Here is how it works:

1) Search for the textbook you need

2) Choose rental period – semester, quarter or 60 days;

3) Free shipping both ways – use the retunable orange Chegg box

4) Chegg plants a tree with every rental

Their familiar orange boxes are well known at the local UPS store because so many students are now using the service.

You can save a lot of money by renting instead of buying and returning college textbooks. For example, one of the most popular Economics textbooks (Economics: Principles, Problems, and Policies) sells for $187.50, but can be rented for a semester for $21.99. With the Chegg 5% discount that goes down to $20.89

These are the same exact textbooks which are sold at the college bookstore. Chegg purchase the books from the same publishers that the college bookstores do. The only difference is that by renting the books, you save money compared to buying and returing the book at the end of the semerster. If you want to buy the book, you are charged the price of the book minus the rental fee you have already paid.

Save 5% off any textbook rental from Chegg – good through August 20, 2010. Click here and use promo code “Aff5″ at checkout.

Save 5% On College Textbook Rentals – Daily Deal is a post from: RateNerd - unadvertised deals from banks.

College Tax Savings Breaks For 2010

Rate Nerd — Wed, 09 Jun 2010 13:29:55 +0000

Cut your college costs with these 2010 tax breaks.

Financing a college education in the 21st century is no small feat.

According to the College Board, the average cost of tuition and fees at a four-year private college for the 2009-2010 academic year was $26,273 and $7,020 for a four-year public university. Add several thousands more for room, board, books and supplies. Fortunately, students, parents and graduates can get some of that money back on their 2010 federal tax return.

The American Opportunity, Hope and Lifetime Learning Credits are likely to yield the biggest tax savings. However, only one of these credits can be claimed per student per year. The American Opportunity and Hope Credits cannot both be claimed on the same return for any students in the same household. However, if the American Opportunity or Hope Credit is claimed for one student, the Lifetime Learning Credit can still be claimed on the same return for another student.

The following requirements apply to all three credits:

Filing status on the return cannot be married filing separately.
The student must be you, your spouse or dependent for whom you claim an exemption.
A dependent cannot claim the credits if claimed on another person’s (i.e. parents’) return.
If you do not claim the dependent exemption (even if entitled to the exemption), you cannot claim a credit based on that dependent’s expenses.
Claim credits on Form 8863 and file with your Federal 1040.

The American Opportunity Credit, scheduled to expire after 2010, is a modified version of the Hope Credit. It’s worth up to $2,500 for tuition, fees and course materials per student for the first four years of postsecondary education. Even if you have zero tax liability, you can get up to 40 percent as a refund. It phases out at higher incomes and cannot be claimed with the Hope Credit on the same return.

The Hope Credit is worth up to $1,800 per student for the first two years of postsecondary education. Expenses may include tuition, fees and course-related materials (as long as the expense for those materials are required to be paid to the educational institution). It phases out at higher incomes, and a student or family claiming the Lifetime Learning Credit or Tuition and Fees Deduction for that same student is ineligible.

If you don’t qualify for the American Opportunity or Hope Credits, consider the Lifetime Learning Credit. Up to 20 percent of the first $10,000 in higher education expenses per family can be claimed for an unlimited number of years. It phases out at higher incomes.

You may also qualify for the Tuition and Fees Deduction, given on a per-student, per-year basis. In other words, you cannot claim the deduction for Student A if you’re claiming one of the above credits for that student, but you may still claim the deduction for Student B. You can deduct up to $4,000 for tuition and fees on Form 8917, regardless of whether you itemize or take the standard deduction. The deduction phases out at higher incomes, and cannot be claimed if you’re married filing separately or claimed as a dependant on another return.

In addition to these credits or deductions, up to $2,500 in student loan interest paid each year for qualified higher education expenses can be deducted on your Federal 1040, even if you don’t itemize. This deduction phases out at higher incomes, and is reduced by non-taxable distributions from a Coverdell Education Savings Account, savings bond interest used for education expenses and scholarships or veteran’s education benefits. Married taxpayers filing separately and people claimed as a dependent on another return don’t qualify.

2010 is also the last year costs paid or incurred for computer technology, equipment and Internet service for students living at home count as a qualified expense for Qualified Tuition Programs (aka 529 Savings Plans). Items must be used by the beneficiary and beneficiary’s family during the years enrolled at an eligible institution.

Additional exceptions may apply to the aforementioned tax breaks, and other educational tax benefits exist for student loan cancellations and repayment assistance, Coverdell Education Savings Accounts, education savings bonds, employer-provided educational assistance and work-related education. Learn more about all education tax benefits in Publication 970 at www.irs.gov.

- Article Courtesy of ARAContent

College Tax Savings Breaks For 2010 is a post from: RateNerd - unadvertised deals from banks.