We had a great discussion last night about how to pay for your child's education and take all of the tax benefits available to you. We discussed the Hope Credit, the Lifetime Learning Credit, the American Opportunity Tax Credit, the education expense deduction, student interest deduction, Coverdell IRA and a host of other more creative methods to pay for your child's education with tax-free dollars.
During our discussion, a question came up that I was unable to answer. So, this morning I researched it and came up with a really interesting answer that could benefit a lot of people.
Q: Am I allowed to take both the tuition and fee deduction and the student loan interest deduction?
A: Yes. You are allowed to take up to $4,000 of qualified expenses for higher education and up to $2,500 of loan interest as deductions on the front page of your tax return. Where this is deducted, as we discussed last night, is really important. Because these are adjustments to gross income on page 1 of your 1040, they will decrease your AGI (adjusted gross income) and could allow you to take other tax benefits such as the deduction for rental real estate losses.
For more information on the best and most creative ways to pay for your or your child's education, go to the School of Tax Strategy page on our website at http://www.provisionwealth.com/products.
Warmest regards,
Tom
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