The Tax Act

of 2001 introduces a brand new and much-needed tax break for people paying

college expenses.

In 2002 and

2003, eligible taxpayers can deduct up to $3,000 worth of qualifying expenses

"above the line," which means you do not need to itemize to

get the break.

The amount

of the deduction will rise to $4,000 in 2004 and 2005 before it is scheduled

to disappear. Eligibility is determined by adjusted gross income. Two

caveats: This deduction is not available to married taxpayers filing separately,

and the tuition deduction cannot be claimed in the same year as a HOPE

or Lifetime Learning credit for the same student.

If you're repaying

a student loan, the new tax law has been kind to you as well. At present,

qualifying taxpayers, even those who don't itemize, can claim a deduction

for up to $2,500 per year for interest paid on student loans during the

first 60 months that interest payments are required.

Eligibility

is determined by adjusted gross income. While the deduction for student

loan interest remains limited to $2,500 per year under the new act, starting

in 2002, eligibility to deduct student loan interest extends for the life

of the loan.

In addition,

the phase-out rule that limits or eliminates college-loan interest deductions

for high-income taxpayers has been liberalized. AGI eligibility for the

student loan interest deduction will increase from $40,000-$55,000 to

$50,000­$65,000 for singles, and from $60,000-$75,000 to $100,000-$130,000

for married couples filing jointly.

The GSCPA is

a professional organization for CPAs in Georgia with over 10,000 members.

For information

visit www.gscpa.org .

Back

to Business Home Page