Table of Contents

Chapter 1 - Education Tax Benefits - Section 1. 1

Work-Related Educational Expenses - §162. 1

Qualifying Education. 1

Requirements. 1

Exception. 2

Temporary Absence. 2

Education Required by Employer or by Law.. 2

Education to Maintain or Improve Skills. 3

Nonqualifying Education. 3

Education to Meet Minimum Requirements. 3

Requirements for Teachers. 4

Certification in a New State. 5

Education to Qualify for a New Trade or Business. 5

Bar or CPA Review Course. 5

Qualifications for Teachers. 5

Deductible Educational Expenses. 6

Unclaimed Reimbursement 6

Transportation Expenses. 6

Mileage. 7

Travel Expenses. 7

Cruises & Conventions. 8

Meal Expenses. 8

Travel as Education. 8

Education Expense Credits - §25A.. 8

HOPE (with “American Opportunity” modifications) Credit 9

Phase Out 10

Refundable. 10

Relationship. 10

Eligible Students. 10

Eligible Expenses. 11

Timing the Credit 11

Eligible Educational Institutions. 12

Lifetime Learning Credit 12

Phase Out 12

Eligible Students. 13

Relationship. 13

Timing the Credit 13

Eligible Expenses. 13

Eligible Educational Institutions. 14

Comparison with Hope (“American Opportunity”) Credit 14

Choosing Which Credit To Claim... 15

No Double Benefit 15

Dependency. 16

Reporting. 16

Education Savings (or Coverdell) Accounts - §530. 16

Contribution Limits. 17

Beneficiary Limit 17

Contributor Limit 17

Phased Out of Contribution. 18

Excess Contributions. 18

Qualified Expenses. 19

Designated Beneficiary. 19

Changing the Designated Beneficiary. 19

Eligible Educational Institution. 20

Half-time Student 20

Coordination with Other Education Incentive. 20

Age 30 Required Distribution. 20

Form 1099-Q Reporting. 20

Documentation & Further Requirements. 21

Rollovers. 21

Transfer Because of Divorce. 22

Withdrawals. 22

When Assets Must be Withdrawn. 22

Deduction for Student Loan Interest - §221. 22

Phase-out 23

Qualified Education Loan. 23

Related Party Loan. 23

Qualified Higher Education Expenses. 23

Payment of Expenses. 24

Eligible Educational Institution. 24

Eligible Student 24

Claiming the Deduction. 25

Reporting. 25

Cancellation of Certain Student Loans - §108. 25

Qualified Tuition Programs - §529. 26

Beneficiary. 26

Changing Beneficiaries. 27

Family Members. 27

Distributions. 27

Form 1099-Q Reporting. 28

Qualified Higher Education Expenses. 28

Computer Equipment & Technology. 28

Refunds & Reinvestment 29

Eligible Educational Institution. 29

Prohibition Against Investment Direction. 29

Interaction with HOPE & Lifetime Learning Credit 29

Gift Tax Annual Exclusion. 29

Chapter 1 – Section 1 Review Questions. 31

Chapter 1 - Education Tax Benefits - Section 2. 33

Higher Education Expense Deduction (Expired)- §222. 33

Eligibility. 33

Maximum Deduction. 33

MAGI. 34

Year of the Deduction. 34

Qualified Higher Education Expenses. 34

Coordination with Exclusions. 35

Coordination with Credits. 35

IRA Withdrawals for Education Expenses - §72(t) 35

Employer-Provided Educational Assistance - §127. 36

Scholarships & Fellowships - §117. 37

Qualified Scholarship or Fellowship - §117. 37

Incidental Expenses. 38

Degree Candidate. 39

Payment for Services. 41

Service Academy Cadets. 41

Student Loans. 41

Cancellation of Student Loan Debt - §108. 42

Qualified Tuition Reduction - §132(h) 42

Educational Savings Bonds - §135. 43

Income Exclusion. 43

Limitation. 45

MAGI. 45

Notice 90-7. 45

Education Expenses. 45

Excludable Interest 45

Forms 8818 & 8815. 45

Educational Incentives & Financial Aid. 46

FAFSA.. 46

Independent Student 46

Financial Aid Planning for the Parent 46

Asset Planning Through the High Income Parent 47

Other Sources of Financial Aid Info. 47

Chapter 1 – Section 2 Review Questions. 48

Answers & Explanations. 49

Chapter 1 – Section 1 Review Questions Feedback. 49

Chapter 1 – Section 2 Review Questions Feedback. 52

Glossary. 55

Keywords & Phrases. a

Final Examination. d