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The 2013 version of Tax Breaks for Higher Education (http://urbanext.illinois.edu/taxbreaks)
contains practical information about how parents and students can lower their
income taxes.
"Each tax break is unique," said Karen Chan, U of I Extension educator and
author of the website. "There are different eligibility criteria, definitions of
qualifying expenses and types of education programs that are covered. This
website provides the details people need to figure it all out," she said.
Chan said the "Highlights" section on the website is a good place to start to
learn the general features and requirements for eight permanent federal tax
breaks. The information is organized in stages: saving for postsecondary
education, paying for expenses and paying off debt.
"For those who are planning ahead and saving for future expenses, people
should check out the Coverdell Education Savings Account; qualified tuition
programs, commonly known as 529 plans; and the savings bond interest deduction,"
Chan said.
Parents and students who are currently paying for higher education expenses
may be eligible for an American opportunity credit, previously called the Hope
Scholarship credit; the lifetime learning credit; employer-provided assistance;
or penalty-free early distributions from IRAs.
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"Most of today's graduates leave school with sizable student loans,"
Chan said. "The interest payments on those loans may qualify them
for the student loan interest deduction."
Sweedler explained that some tax breaks can be used for many
types of higher education classes, whereas others can only be used
to pursue a degree. To qualify for many tax breaks, your income must
be below certain limits, some of which change each year. Those kinds
of details are spelled out in the section titled "Eligibility and
Limitations."
"If you're worried about the tax records you'll need and how to
claim the tax breaks, the new section addressing ‘Tax Forms and
Reporting' will guide you," Chan said. "It lists the types of
statements you should receive and tells you exactly where to report
or claim a tax break."
[Text from file received from the
University of Illinois College of Agricultural, Consumer and
Environmental Sciences] |
