Expiring provisions

[JG EA]

I am going to review a client's tax info and look ahead into 2011. I realize everything is changing, but I want to present things as they are now. One aspect we will be discussing is education.

If things expire according to what we have on the lawbooks now, is this a true statement? (Leaving out the business side - just taking into consideration education for TP, S, and Dependents.)

The Lifetime Learning Credit will be the only education credit available in 2011. The only education deduction will be Savings Bond interest deduction for education. Also still available is the no 10% additional tax on IRA distributions for education.

[VT-EA]

List Of Expiring Federal Tax Provisions 2009-2020

http://www.jct.gov/publications.html?func=startdown&id=3646

And from "Present Law And Background Data Related To The Federal Tax System In Effect For 2010 And 2011 " http://www.jct.gov/publications.html...rtdown&id=3674

"American opportunity tax credit.−The American opportunity tax credit expires after 2010 and the HOPE credit resumes its place after the American opportunity tax credit’s expiration.

For 2011, the HOPE credit can be up to $1,800 per eligible student per year for qualified tuition and related expenses paid for each of the first two years of the student’s post-secondary education in a degree or certificate program. For 2011, the credit is phased out ratably for taxpayers with adjusted gross income between $51,000 and $61,000 ($102,000 and $122,000 for married taxpayers filing a joint return). The otherwise allowable credit is not refundable for 2011."

[Gary2]

I'm guessing that work-related education expenses aren't relevant to your client, but presumably those will still be around. Coverdell and section 529 accounts will still be around, but computers and technology expenses will no longer be qualified expenses and the limits for Coverdell contributions will be lower. (This isn't a complete list of the 529/Coverdell changes, just the most obvious.)

[JG EA]

Thanks Gary and VT


Quote:
Originally Posted by VT-EA
["... HOPE credit resumes its place after the American opportunity tax credit’s expiration.

For 2011, the HOPE credit can be up to $1,800 per eligible student per year for qualified tuition and related expenses paid for each of the first two years of the student’s post-secondary education in a degree or certificate program. For 2011, the credit is phased out ratably for taxpayers with adjusted gross income between $51,000 and $61,000 ($102,000 and $122,000 for married taxpayers filing a joint return). The otherwise allowable credit is not refundable for 2011."

I missed that - looked around for something on the Hope Credit but didn't find it. So, this is helpful.
Thanks for the 529 info Gary, I did see some of that, but the planning they want might just be for 2011 credits. They made money in 2010 - that's pretty good.