Is there a way I can save on my taxes if I have a child in college?
Valerie RumboughThere are several ways you may be able to reduce your federal tax liability if you or a dependent are in college.
The Hope and the Lifetime Learning Tax Credits are credits against your federal income tax liability. The amount of the credit may be from $1,500 to $2,000. For 2005, you can take an “above-the-line” deduction of up to $4,000 for tuition and fees for higher education. However, you cannot take this deduction plus either of the two credits for the same student.
You may also be able to take an “above-the-line” deduction on interest you pay on student loans, up to $2,500. Note, however, that the amounts stated above for the credits and the deductions may be adjusted downward or eliminated when your income reaches certain amounts.
For more information on these and other education benefits, you can visit the IRS website, www.irs.gov, and do a search for Form 970 in the “Forms and Publications” section of the website.
Rumbough, CPA, CFP is vice president of finance with the Baptist Foundation of South Carolina. For more information concerning the above article or other matters, contact her at 800-723-7242.
Editor’s Note: In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purposes.