Johnson, Agen, Kupferschmidt & Associates

Tax Tips

September 2009

Tax Incentives for Higher Education

There are a variety of tax incentives for families who are saving for, or already paying, higher education costs or are repaying student loans (various rules apply to each).

You may be able to claim a Hope and Lifetime Learning Credit for the qualified tuition and related expenses of the students in your family who are enrolled in eligible educational institutions. Different rules apply to each credit. If you claim a Hope Scholarship Credit for a particular student, none of that student’s expenses for that year may be applied toward the Lifetime Learning Credit.

You may be able to claim a tuition deduction of up to $4,000 of qualified education expenses paid during the year for yourself, your spouse, or your dependent. The qualified expenses must be for higher education.

You may be able to deduct interest you pay on a qualified student loan. And, if your student loan is canceled, you may not have to include any amount in income.