families the opportunityto deduct up to $12,000 per year from their total incomes tohelp reduce the rising costs of college tuition and relatedexpenses. Unfortunately, and to the detriment of untold numbersof taxpayers with students in college, the Tuition and FeesDeduction allows a mere deduction of $3,000 for tax years2002-2003, and $4,000 for tax years 2004-2005. The Deductionsunsets after 2005.
To many families, an annual eight or nine thousand dollars couldmean the difference of being forced to settle for a localcommunity college as opposed to sending their student to a stateschool. Arguably, America’s future rests with its educatedyouth, and this is no way to treat those who will hold the fateof our country in their hands.
The drastic slashing by Congress of Senator Schumer’s proposedbill and President Bush’s failure to send it back to them is thecase in point substantiating that the government of the UnitedStates doesn’t give a hoot in hell about the financial strugglethe average American parent endures in their endless pursuit ofthe American dream for their children!
Effective legislation to make college expenses tax deductible islong overdue and began with the Tax Payer Relief Act of 1997,which Senator Schumer also supported and voted for. The Actcreated two education tax credits, the HOPE Scholarship Credit(maximum $1,500 a year for 2 years), and the Lifetime LearningCredit (maximum $1,000 increasing to $2,000 in 2003).
Note: A tax deduction lowers taxable income, and the savingsdepends on the filer’s tax bracket. A tax credit directly lowerstaxes by the amount of the credit, dollar for dollar, regardlessof the filer’s tax bracket.
Although it certainly was a step in the right direction, the TaxPayer Relief Act of 1997 fell far too short in providing majortax relief for America’s college families, especially in view ofsoaring tuition costs and other related expenses that familiesendure year after year to send their kids to college.Nonetheless, the real tragedy for America is the Tuition andFees Deduction, which, when taken by taxpayers who qualify forThe HOPE Scholarship Credit or The Lifetime Learning Credit,will actually cause them to overpay their taxes by hundreds ofdollars each year!
Affluent single and head of household taxpayers whose incomesexceed $51,000, and joint filers whose incomes exceed $102,000,will not qualify for the HOPE Scholarship or Lifetime LearningCredit, and are therefore, the only ones who actually benefitfrom taking the Tuition and Fees Deduction. Thus, camouflaged astax relief to offset college costs for all of America’s collegefamilies, all Congress actually did was Robin-Hoodwink mostlower and middle income families by taking from them and givingto the rich! The wisdom of Mark Twain’s words cannot be denied.
This is one of a series of articles by college admissions andfinancial aid expert, Reecy Aresty, based on his book, “GettingInto College And Paying For It!” For further informationincluding how to obtain the complete SPECIAL REPORT on theTuition And Fees Deduction with refund eligibility, please visitwww.thecollegebook.com.
About the author:For almost three decades, financial advisor Reecy Aresty hashelped thousands of families protect their assets, increasetheir wealth, and reduce their taxes. His book, “Getting IntoCollege And Paying For It,” reveals what colleges don’t wanttheir applicants to know! Filled with trade secrets and insiderinformation, it is guaranteed to give students the all-importantedge in admissions, and parents countless legal ways to reducethe cost.
