Great Ways to Save on Education
The United States government has taken steps to make paying for school easier. Be sure to consult your tax advisor to determine whether you may take advantage of any of these incentives.
American Opportunity Credit
Claim up to a $2,500 credit on college and other post-secondary expenses, even if you don't owe any taxes. Learn more on the IRS YouTube Web site.
HOPE Tax Credit
Qualifying taxpayers can claim a tax credit of up to $1,500 for each qualifying family member who is attending an eligible school. You can claim 100% of the first $1,000 of your "out-of-pocket" educational expenses for each student, plus 50% of the next $1,000. The student must be enrolled at least half time and in the first or second year of a degree of certificate granting program.
Lifetime Learning Tax Credit
Qualifying taxpayers can claim a maximum credit of up to $2,000 (20% of the first $10,000). This credit is calculated per family, not per student. You can claim this credit at any time during a student's education at an eligible school. The student needs to be enrolled in at least one course.
Coverdell Education Savings Account
This program allows you to save money for future educational expenses. A Coverdell Account can be established for anyone under 18 years of age. Contributions are not tax deductible, but the funds grow untaxed.
These state-sponsored investment programs permit taxpayers to make contributions on behalf of a beneficiary. The account earnings are untaxed until withdrawn for the beneficiary's qualified college education expenses. Listed below are links to more information about the 529 plans for just a few of our neighboring states.
For a comprehensive list of plans as well as more information about Saving for College, check out Savingforcollege.com -- a Web site founded in the spring of 2000 by a curious, mild-mannered public accountant with a mission of helping families figure out ways of paying for college.