Education Expenses

If you are receiving this education to maintain or improve skills at your current job, yes, but not if it is to meet the minimum requirements.

In certain instances, yes, although deductions need to adhere to a few guidelines. The deduction is also subject to income phaseouts. The deduction ceiling is $2,500. If you are a dependent, you may not claim the interest deduction. You need to be the person liable for the debt and the loan must be purely for […]

There is a limited deduction allowed for higher education and related expenses. In addition, business expense deductions are allowed, without a dollar limit, for education related to the taxpayer’s business, employment included.

Yes, you can take distributions from your IRAs for qualifying education expenses without having to pay the 10% additional tax penalty. You may owe income tax on at least part of the amount distributed, but not the additional penalty. The amount of the distribution that is more than the education expense does not qualify for […]

The Section 529 allows for much larger yearly investments, whereas the Section 530 currently only allows for $2000 annually. The choice of investments in the Section 529 is extremely conservative and limited while the Section 530 allows for many different options. The Section 530 is a nationwide program while the 529 varies from state to […]

The Section 529 is a college savings program available in most states. Money is invested to cover the costs of future education. These investments grow tax free and the distributions may also be tax-free.

It is possible to have various 530 accounts for the same student, each opened by different family members or friends. There is no limit to the number of people that can open an account like this for a child. The account can be transferred to another family member at any time. If the original child […]

An education IRA is different than a standard IRA in these ways: Withdrawals aren’t taxed if used for qualified education expenses. Contributions can be made only up until the point that the client reaches 18, and all funds must be distributed by the time that they are 30. Contributions are not tax deductible

You must make a choice between two types of tax education credit. The American Opportunity Tax Credit will work for the first 4 years of college for at least full-time study. The Lifetime Learning Credit applies for as long as the student studies, but the percentage of savings per year decreases drastically.

There are many different ways to use tax breaks for the higher education of your children. Be aware that you can only receive one type of relief for one item. It is best to consult with a professional to determine which would be the most advantageous.