H IGHLIGHTS FOR T AX B ENEFITS FOR H IGHER E DUCATION (T AX Y EAR 2011) This chart highlights some program differences Do not rely on this chart alone.

Scholarships, Fellowships, Grants, and Tuition Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction

Tuition and Fees Deduction

What is your benefit? Amounts received may not be taxable

Credits can reduce amount of tax you must pay

40% of credit may be refundable (limited to $1,000)

Credits can reduce amount of tax you must pay

Can deduct interest paid

Can deduct expenses

What is the annual limit? None $2,500 credit per student

$2,000 credit per tax return

$2,500 deduction $4,000 deduction What expenses qualify besides tuition

and required enrollment fees? Course-related _{expenses such fees,} books, supplies, and equipment

Course-related books, supplies, and equipment

Amounts paid for required books, etc., that must be paid to the educational institution, etc., ARE required fees

Books Supplies Equipment Room & board Transportation Other necessary expenses

None

What education qualifies? Undergraduate graduate K–12 1st 4 years of undergraduate (postsecondary) Undergraduate & graduate Courses to acquire or improve job skills

Undergraduate & graduate

Undergraduate & graduate

What are some of the other conditions

that apply? Must be in degree or _{vocational program} Payment of tuition and required fees must be allowed under the grant

Can be claimed for only 4 tax years (which includes years Hope credit claimed) Must be enrolled at least half-time in degree program No felony drug conviction(s)

No other conditions Must have been at least half-time student in degree program

Cannot claim deduction & education credit for same student in same year

In what income range do benefits

phase out? No phaseout $80,000 – $90,000 $160,000 – $180,000 for joint returns

$51,000 – $61,000 $102,000 – $122,000 for joint returns

$60,000 – $75,000 $120,000 – $150,000 for joint returns

$65,000 – $80,000 $130,000 – $160,000 for joint returns

H

T

B

H

E

(T

Y

2011)

Coverdell ESA* Qualified Tuition _{Program (QTP)*}

Education Exception to Additional Tax on Early IRA Distributions* Education Savings Bond Program* Employer-Provided Educational Assistance* Business Deduction for Work-Related Education

What is your benefit? Earnings not taxed Earnings not taxed No 10% additional tax on early distribution

Interest not taxed Employer benefits not taxed

Can deduct expenses What is the annual

limit? $2,000 contribution _{per beneficiary} None Amount of qualified _{education expenses} Amount of qualified _{education expenses} $5,250 exclusion Amount of qualifying _work-related education expenses What expenses

qualify besides tuition and required enrollment fees?

Books Supplies Equipment

Expenses for special needs services Payments to QTP

Higher education: Room & board at least half-time student

Elem/sec (K–12) education:

Tutoring Room & board Uniforms Transportation Computer access Supplementary expenses Books Supplies Equipment Room & board at least half-time student

Expenses for special needs services Computer technology, equipment, and Internet access (2010) Books Supplies Equipment Room & board if at least half-time student

Expenses for special needs services Payments to Coverdell ESA Payments to QTP Books Supplies Equipment Transportation Travel Other necessary expenses What education

qualifies? Undergraduate & _graduate K–12 Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Required by employer or law to keep present job, salary, status Maintain or improve job skills

What are some of the other conditions that apply?

Assets must be distributed at age 30 unless special needs beneficiary

No other conditions No other conditions Applies only to qualified series EE bonds issued after 1989 or series I bonds

No other conditions Cannot be to meet minimum educational requirements of present trade/business Cannot qualify you for new

trade/business In what income range

do benefits phase out?

$95,000 – $110,000 $190,000 – $220,000 for joint returns

No phaseout No phaseout $71,100 – $86,100 $106,650 – $136,650 for joint and qualifying widow(er) returns

No phaseout No phaseout

Chapter

3

This chapter lists student financial aid resources offered by state, residency requirements to qualify for in-state tuition, and links to higher education and veteran affairs agencies.

Federal funds are allocated to states to encourage the expansion of state scholarship and grant assistance to students. State governments also contribute sizeable sums to various types of aid programs ranging from tuition waivers to full scholarships for students residing in their state. States may also offer internships or work-study programs, graduate fellowships and grants, and low-interest loans.

The Byrd Scholarship provides federally-funded grants to states for undergraduate study scholarships at institutions of higher education. The scholarships are

awarded to outstanding high school graduateswho show promise of continued excellence in an effort to recognize and promote excellence and achievement.

Students attending a military academy are not eligible for a Byrd Scholarship.

Scholarship recipients are known as Byrd Scholars and receive up to $1,500 per academic year of study. Byrd Scholarship awards can be renewed up to three

additional years of academic study, provided funds are available and students remain eligible.

Eligible students must:

1. Be a graduate of a public or private secondary school or received the recognized equivalent of a high school diploma (GED);

2. Be a legal resident of the state where they apply;

3. Be a U.S. citizen or national of the U.S. or have evidence from the U.S. Immigration and

Naturalization Service that they are a permanent resident or in the U.S. for other than a temporary purpose;

4. Have applied or been accepted for enrollment at an institution of higher education;

5. Certify they are not ineligible to receive assistance as a result of default on a federal student loan or other obligation; and

6. File a Statement of Selective Service Registration Status with the school they plan to attend.

Details: www.ed.gov/programs/iduesbyrd

The LEAP Program assists states in providing grants or work-study to eligible students. Each state has its own award amounts and application procedures. Many of the eligibility criteria are established by the state agency administering the program, although LEAP recipients must also meet the same basic eligibility criteria that apply to other federal student aid recipients.

Details: www.ed.gov/programs/leap

ED’s Rehabilitation Services Administration (RSA) provides grants to state vocational rehabilitation agencies to help individuals with disabilities train for employment, obtain employment, and live more independently.