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| *Business questions>>>Taxes Questions |
What does a college loan that is tax decutible mean? |
Question: What does a college loan that is tax decutible mean? Answer: There are a couple of things that I'm aware of concerning Federal taxes...each state is different, so I won't go into state taxes here. For federal taxes, there are two times when you can save when it comes to post-secondary (college) education. When you first pay for the classes, you or the person who claims you as their dependent may be able to take the Lifetime Learning Credit, the Hope Credit, or the Tuition and Fees deduction. Each has their own advantages and disadvantages. It is best to see a tax professional who knows how to work these out. The nice thing is that you get these even if you take out a loan to pay for the class, as long as you (or the person claiming you as their dependent) are liable for paying back the loan. Now, after college is done and you are repaying the loan, as long as your name is on the loan and as long as you make the payment, you get to deduct the interest off from your income as an adjustment. You get to do this regardless whether you file a Schedule A. And, a recent change to the law passed by congress a few years back eliminated the "number of years" requirement. In other words, you can write off the interest regardless how many years ago you took out the loan. As with most tax laws, there are limits and exception to everything. It is best to seek a tax professional, or at minimum, use a tax program that walks you through the questons. Make sure you mention that you had tuition or loan payments. Hope this answers your question. |
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