Irs Gives Tax Credit For College!

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 grant online, look on the internet.

For starters, the IRS increased the number of people who can get the deductions by increasing what's called the phase out limit, i.e., how much you can earn and still be able to file for a deduction. The limit for an individual was $55,000 adjusted gross income for full deductions and from $55,001 to $70,000 for a percentage. For those filing joint returns, the cut offs were $110,000 and $145,000 respectively. Now they are $60,000 and $75,000 for single claimants and for those filing jointly the ranges are $120,000 and $150,000.

One thing to consider is one must have attended an accredited, "qualified" institute of higher learning, and the student must be going to the school on a minimum half-time basis. The university can be either an on campus or online college. From there, the college loan must be applied to paying a pretty broad list of items, including tuition, fees, equipment, room and board and travel.

It should also be noted that the IRS will not allow any deductions if the money is from immediate family. They also won't allow the deductions if it's part of an education program from one's place of employment. There is also a cap on how much one can deduct to the tune of $2,500 per year. There is an abundance of information about pell grants on the web.

After keeping all these conditions in mind, calculating the deduction is a pretty simple matter. For instance, if a single person earns under $60,000 that tax year, the first thing to do is get a statement from the lending institution. Break down what was paid to the principle from the interest. Then deduct the interest paid with a 1098-A form. If it's between $60,001 and $75,000, the IRS's web site has a pretty easy formula to figure out what percentage can be deducted. If one's filing a joint return, substitute the respective numbers regarding the various phase out numbers.

There are other provisos one should always be mindful of, some of which can increase one's number of deductions. A solid suggestion is to find a qualified tax person to help with figuring out what's deductible and what's not.

by: Natasha Bright

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