Maxine Aaronson, Attorney at Law
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Tax Newsletter

  • Self-Employment Tax: Partnerships
    The Internal Revenue Service generally requires self-employed individuals to pay self-employment taxes. How does this self-employment tax requirement apply to partnerships? Generally, if you are a partner, your proportionate... Read more.
  • Divorce and Federal Income Taxes
    Prior to filing for divorce, various federal tax considerations should be reviewed due to their potentially profound implications. Among the major issues commonly covered in a divorce decree or agreement are: alimony, sometimes referred... Read more.
  • Advantages to Employers of “Temp” and Leased Employees
    Over the past several decades it has become increasingly expensive to hire and maintain employees. A large part of the expense relates to government programs and reporting requirements, but accounting costs related to employees have... Read more.
  • Special Use Valuation for Certain Estate Properties
    Calculation of the Value of Estate Assets Estate taxes are calculated based upon the value of the assets in the estate. One duty of the executor or administrator is to inventory all estate assets and assign a... Read more.
Tax News Links

Higher Education Tax Benefits

You may be able to receive tax benefits if you are saving or paying for expenses related to a higher education, either for yourself or for a family member. There are a number of tax benefits that you may be entitled to.

Educational Tax Credits

The American Opportunity Credit (Hope Credit) and the Lifetime Learning Credit apply to tuition and enrollment fee expenses. Only one of these can be applied per qualified student per year. Different rules apply to each separate tax credit. However, neither credit can be used by households with incomes of $62,000 or more or for households of combined incomes of $124,000 or more (joint returns).

Individual Retirement Accounts (IRAs)

The education IRA and traditional IRA may be applied to tuition expenses, as well as expenses related to books, supplies, and room and board. Withdrawals from an education IRA account are tax-free, with limitations.

Student Loan Interest Tax Deductions

Interest paid on student loans may be deductible. This only applies to the first 60 months of loan interest. The loans must also be used for at least half-time in a degree program.

Qualified State Tuition Programs

Under these programs, future tuition expenses are prepaid, and earnings are not taxed until they are withdrawn.

U. S. Savings Bonds

The interest earned is excludable from income. However, this only applies to specific qualified bonds.

Employer’s Educational Assistance Programs

Like savings bonds, employer benefits are excludable from income, with a $5,250 annual limit.

As some higher education benefits will not allow you to claim two educational benefits simultaneously, those taxpayers interested in taking advantage of higher education tax benefits should investigate the specific terms of the relevant benefit programs.