Above-The-Line Education Deduction |
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Beginning in 2002 and through 2007, taxpayers are allowed an above-the-line deduction for qualified tuition and related expenses for the year, to the extent the expenses are in connection with enrollment at an institution of higher education during that tax year, or if those expenses are in connection with an academic term beginning during that tax year or during the first 3 months of the next tax year.
Education Credits Can Be Claimed On An Amended Return |
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The IRS has announced that individuals who could have claimed the education credit but failed to do so on their original returns, may claim the credit on an amended return. In general, an amended return may be filed within three years from the date your return was filed or within two years from the time the tax was paid, whichever is later.
Coverdell Education Savings Accounts |
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These accounts came into being in 1997 and are actually education trusts that allow funds to be put away for a child's education. Tax on earnings from these accounts is deferred until the funds are withdrawn, and if used for qualified education purposes, the entire withdrawal can be tax-free.
Deduction for Higher Education Interest |
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Generally, taxpayers can only deduct home mortgage interest, investment interest, and business interest. However, interest paid on student loans used to pay tuition, room and board and related expenses for qualified higher education is an above-the-line deduction. The deduction is limited to $2,500.
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