USA Funds helps families identify potential tax savings
INDIANAPOLIS, Jan. 8 /PRNewswire/ -- USA Funds(R), the nation's leading
education loan guarantor, advises college students, former students and their
parents that they may be able to reduce their federal income tax bills if they
paid certain college expenses during 2007.
"In recent years the U.S. Congress has enacted measures that have expanded
federal income tax benefits for families that pay tuition, fees and other
higher education expenses," said Carl C. Dalstrom, USA Funds president and
CEO. "USA Funds urges taxpayers to consider potential tax benefits that may
apply to them as they prepare their 2007 income tax returns."
Among the higher education tax benefits for the 2007 tax year are the
following items:
Student loan interest deduction. Taxpayers who paid interest on qualified
student loans during 2007 may be eligible to deduct up to $2,500 from
their taxable income. Income limits to qualify for the deduction are
higher in 2007. Single taxpayers with modified adjusted gross incomes of
less than $70,000 and married taxpayers who file joint tax returns
reporting modified adjusted incomes of less than $140,000 may qualify for
at least a partial deduction.
Hope and Lifetime Learning credits. The maximum income permitted to
qualify for the Hope and Lifetime Learning tax credits has been increased.
Single taxpayers with modified adjusted gross incomes of less than $57,000
and married taxpayers filing jointly with incomes of less than $114,000
now qualify for at least a partial credit. On the other hand, tax
provisions that offered larger Hope and Lifetime Learning tax credits to
residents of portions of Alabama, Louisiana and Mississippi affected by
the 2005 hurricanes have expired and will not apply to 2007 returns. The
Hope tax credit permits taxpayers to reduce their taxes by as much as
$1,650 per student for out-of-pocket tuition and fees for each of the
first two years of postsecondary study. The Lifetime Learning credit
provides a maximum $2,000 credit based on qualified tuition and related
expenses paid for any year of postsecondary study.
Deduction for higher education expenses. Taxpayers whose incomes exceed
the limits to qualify for the Hope and Lifetime Learning tax credits may
consider this deduction. The maximum deduction of $4,000 is available to
single taxpayers with modified adjusted gross incomes of $65,000 or less,
or married taxpayers with incomes of $130,000 or less. Single taxpayers
with incomes greater than $65,000 but not more than $80,000, and married
taxpayers with incomes greater than $130,000 but not more than $160,000,
may qualify for a deduction of up to $2,000. Taxpayers don't have to
itemize their deductions to claim this benefit.
Other higher education tax benefits. Taxpayers also should consider
potential tax savings based on earnings from so-called 529 college savings
plans and Coverdell Education Savings Accounts, as well as employer-paid
education benefits.
To help students and parents take advantage of these benefits, USA Funds
offers a summary of these higher education tax benefits on its Web site at
www.usafunds.org/taxbenefits. USA Funds also provides a brochure "Higher-
Education Tax Benefits - Expanded Taxpayer Savings," which is available free
of charge from many colleges, universities and private career colleges.
USA Funds recommends that individual taxpayers consult with a qualified
tax adviser or the Internal Revenue Service to determine their eligibility for
any of these tax benefits.
Headquartered in Indianapolis, USA Funds is a nonprofit corporation that
works to enhance postsecondary-education preparedness, access and success by
providing and supporting financial and other valued services. During the year
ending Sept. 30, 2007, USA Funds guaranteed education loans totaling $25.8
billion for students and parents throughout the nation. USA Funds serves as
the designated guarantor of federal education loans in eight states: Arizona,
Hawaii, Indiana, Kansas, Maryland, Mississippi, Nevada and Wyoming. USA Funds
also invests $16.3 million annually in scholarships and outreach programs that
advance its mission of support to higher education. For more information about
USA Funds, visit www.usafunds.org.
SOURCE USA Funds
Robert P. Murray, Vice President, Corporate Communications of USA Funds,
+1-317-806-1283, bmurray@usafunds.org
