Tax Breaks for The Scholastically Inclined
Student Loan Deductions:
For student loans after December 31, 2001, the student loan deduction has been removed. It used to be the first 60 months in which interest payments are required on the loan. Now it will be easier on those who take more than 5 years to pay back their loans.
The income-eligibility limits for the student loan deduction have been raised. The current regulations phase out the deduction for single tax payers with adjusted gross incomes of between $40,000 and $50,000, and for married taxpayers, incomes of between $60,000 and $75,000. Starting next year, the new limits will be between $50,000 and $65,000 for the single taxpayer and between $100,000 to $130,000 on those filing jointly.
Employer Education Assistance:
Good news for those with tuition assistance from their employer. The tax break for educational assistance from an employer was set to expire at the end of this year (2001). The new law makes it permanent. And, in addition, the new law extends the exemption to graduate studies (but not until 2002). The current exemption is for $5,250 per year maximum exemption and only applies to undergraduate studies.
Education IRAs Now For Little Ones...
Our new tax law now permits disbursement of Educational IRA funds for elementary and high school expenses. This includes tuition, fees, tutoring, books, supplies, equipment and "special needs services" for special needs students.
...And Their Computers
Now, computers, peripherals, software and Internet access are allowable expenditures from education IRAs for elementary and secondary school children. However, Doom II and Quake do not qualify; the software must be primarily educational in nature. Sorry, kids.