Paying for College

It’s a little early to start thinking about your tax refund and deductions, but as we wrap up 2007 and head into 2008, might as well start to think about it in the upcoming weeks.

When it comes to interest deductions, remember that personal interest is nondeductible for income tax purposes, but there is an exception for interest paid on education loans whether or not you itemize your deductions.

Any education loan for yourself, your spouse, or your dependents is eligible up to $2500.  New to 2007 is that this deduction is reduced for those who gross over $55k per year.  Anyone over $70k does not qualify for the deduction.

On top of the deduction for interest paid on student loans is a possible deduction for qualifying tuition and related school expenses.   Don’t forget about the Hope or Lifetime Learning credits also available but be sure to co-ordinate them and choose the one that works best and pays you the most.

Good luck and don’t forget these tax tips come April 15th, I can tell you from personal experience that they can equal some considerable extra money in your refund this year.

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