Apparently, the nation is so concerned about the lack of college students, including distance learning degree program attendees, that even the Internal Revenue Service is doing what it can to help ease the financial burden. It is not only administering a number of tax credits, but is also allowing students (or their parents) a number of deductions when filing one’s income taxes.
As many students know all too well, it’s nigh impossible to go for a full degree without encountering some sort of college loan. True, these loans do allow a grace period of six months after graduation before one has to start paying, but with these loans many times getting into the multiple thousands of dollars, they end up being very bitter pills to swallow. As of last year, the IRS has made it a little easier on the general public. If you need more information about online college grant, look on the internet.
The first thing the IRS did was make it possible for more people to claim these deductions. They increased the phase out limit, or how much you can earn and still be able to file for a deduction. Before 2009, the limit for single claimants was $55,000 adjusted gross income for full deductions and from $55,001 to $70,000 for partial deductions. For people filing joint returns, the ceilings were $110,000 and $145,000 respectively. Starting with this year, the limits are now $60,000 and $75,000 for individuals and $120,000 and $150,000 for joint returns.
There are some other things to consider. First, one must attend accredited, “qualified” institute. The student must be taking at least a half-semester’s course load. The university can be either an on campus or online college. It can also be an accredited trade school. On the plus side, the money from the college loan can be used to pay a fairly wide list of items, from tuition to transportation.
There are some important restrictions to contemplate. The IRS will not allow any deductions if the loan comes from a personal relative. They also won’t allow most deductions if it’s part of a private corporation’s educational program, especially one that employs the student. There is also a limit to how much one can deduct a year. There is an abundance of information about online programs on the web.
From there, if a single person earns under $60,000 in the tax year in question, one should get a statement from the loaning institution. Break down what went to the principle from what was used to pay interest. Now deduct the interest paid utilizing a 1098-A form. If it’s between $60,001 and $75,000, go to the IRS web site and learn a formula they provide to discern the percentage of interest that can be deducted. If filing a joint return, substitute the numbers provided above regarding the various phase out numbers.
While the IRS doesn’t try to turn these kind of deductions into a series of Fibonacci sequences normally used to contemplate the limits of the universe, it’s probably advisable one do all this with the aid of a tax expert. Find one that actually specializes in all of this, too, not just the typical tax person who disappears after April 15.
These days one can use every bit of help one can get, especially for those attending a accredited online universities who might have chosen that route for financial reasons, rather than flexibility. Federal Pell grants seem to be a part of education, a big part, and learning all you can about possible credits for these loans can be huge.
July 23, 2010 by Michelle Conner
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