RESTON, Va., Jan. 30 /PRNewswire/ -- Higher education pays great
dividends, not only in the form of personal satisfaction and fulfilling
employment, but also through tax credits and deductions. Individuals repaying
student loans, as well as current college students and their parents, may be
eligible for certain benefits that could save them thousands of dollars this
tax season. Wiredscholar.com, the most comprehensive online resource for
planning and paying for college, has information available to help college
students, student-loan borrowers and families maximize these education-related
tax credits and deductions.
Education-loan borrowers may be able to deduct up to $2,500 in interest
paid on Federal Stafford, PLUS, Perkins and Consolidation loans, as well as
private loans used to pay for education expenses. To qualify, proceeds of the
loan must have been used for qualified higher education expenses, including
tuition, fees, room, board, supplies and other related expenses. Individuals
must not have been claimed as a dependent on their parent's or another
person's tax return, and the beneficiary of the loan must have been enrolled
at least half-time in a program leading to a degree or another recognized
credential at an eligible institution.
For tax year 2001, a single taxpayer with an adjusted income of less than
$55,000 or a married couple with a joint adjusted income of less than $75,000,
may qualify for a full or partial deduction. For 2001, the deduction is only
available for required interest payments made during the first 60 months of
loan repayment. Beginning in tax year 2002, income requirements will be
expanded, and the 60-month limit will be lifted, so even more families will
qualify for this deduction.
Borrowers who paid at least $600 in interest on education loans in 2001
can expect to receive a statement called a 1098-E form this month from their
student loan lender or servicer. In order to claim the deduction, borrowers
must file using federal tax form 1040 or 1040A, but are not required to
itemize their deductions. To find out whether they qualify for this tax
deduction, borrowers can call the IRS Help Line at 1-800-829-1040 or, read IRS
publication 970, Tax Benefits for Higher Education, which can be downloaded
from the IRS Web site, http://www.irs.gov.
In addition to these tax benefits for individuals repaying student loans,
current post-secondary education students or their parents may qualify for
either the HOPE Scholarship or the Lifetime Learning Tax Credit. These
credits offer students and their families a credit on their federal income tax
bill for tuition and fees incurred at an eligible school. Students and parents
must file a tax return and owe taxes to get these credits.
The HOPE Scholarship provides a family up to a $1,500 maximum tax credit
per year per dependent student. Students may claim it for two years if they:
* have not completed the first two years of post-secondary education
(generally, if they're a freshman or sophomore);
* are enrolled in a program that leads to a degree, certificate, or other
recognized educational credential;
* are taking at least half the normal full-time course load for their
major for at least one academic period beginning during the calendar
year; and
* are free of any felony conviction for possessing or distributing a
controlled substance.
The HOPE Scholarship tax credit covers 100 percent of the first $1,000 in
payments for qualified tuition and fees and 50 percent of the second $1,000.
Expenses that qualify for the HOPE Scholarship include school tuition and
required fees, minus any tax-free grants or scholarships. The costs of books
and supplies are usually not covered, but students should check with their
school. This tax credit does not cover room and board, insurance,
transportation, or medical fees.
The Lifetime Learning Tax Credit is a tax credit of up to $1,000 per
family for post-secondary education courses. Students may claim only one
credit per tax year. Students may claim the Lifetime Learning Tax Credit if
their family has children enrolled at eligible institutions. There are several
differences between the HOPE Scholarship and the Lifetime Learning tax
credits. The latter:
* is not based on the student's work load and is allowed for one or more
courses;
* is not limited to students in the first two years of post-secondary
education;
* can be claimed for expenses for graduate-level degree work;
* has no limit on the number of years for which the credit can be claimed
for each student; and
* does not increase (i.e., the amount to be claimed) based on the number
of students receiving qualified expenses.
For this information and other planning and paying for college tools,
visit http://www.wiredscholar.com.
Wiredscholar.com is the foremost online resource for "going-to-college"
information for students, parents and guidance professionals. Launched in
spring 2000, the site is the most comprehensive and objective resource on the
Web for information and interactive tools to assist with college preparation,
evaluation, selection, application and financing, all in one online location.
The site is a four-time "Forbes Favorite" in the college-planning category in
Forbes.com's "Best of the Web." Wiredscholar.com is an independent brand of
Sallie Mae, the nation's largest source of education funding, which extends
the company's commitment to helping students achieve a higher education. For
more information, visit http://www.wiredscholar.com. USA Education, Inc. and its
subsidiaries, other than the Student Loan Marketing Association, are not
sponsored by or agencies of the United States.
SOURCE Wiredscholar.com
 back to top
Related links:
http://www.wiredscholar.com
Company News On-Call:
http://www.prnewswire.com/comp/147826.html
CONTACT:
Erin Love of Sallie Mae, +1-703-810-7136, or
erin.b.love@slma.com
|
