Publication 970
Tax Benefits for Education

For use in preparing 2002 Returns

Table of Contents

[ Click for Index ]

Publication 970, Tax Benefits for Education

• Important Changes for 2002
• Important Changes for 2003
• Important Reminder
• 1. Hope Credit
  • Important Changes for 2002
  • Can You Claim the Credit?
    • Who Cannot Claim the Credit?
    • Who Can Claim the Credit?
  • What Expenses Qualify?
    • Qualified Tuition and Related Expenses
    • No Double Benefit Allowed
      • Adjustments to Qualified Expenses
    • Expenses That Do Not Qualify
  • Who Is an Eligible Student?
  • Who Can Claim a Dependent's Expenses?
  • How Is the Credit Figured?
    • Does the Amount of Your Income Affect the Amount of Your Credit?
  • How Is the Credit Claimed?
  • When Must the Credit Be Repaid (Recaptured)?
  • Illustrated Example
• 2. Lifetime Learning Credit
  • Important Changes for 2002
  • Important Change for 2003
  • Can You Claim the Credit?
    • Who Cannot Claim the Credit?
    • Who Can Claim the Credit?
  • What Expenses Qualify?
    • Qualified Tuition and Related Expenses
    • No Double Benefit Allowed
      • Adjustments to Qualified Expenses
    • Expenses That Do Not Qualify
  • Who Is an Eligible Student?
  • Who Can Claim a Dependent's Expenses?
  • How Is the Credit Figured?
    • Does the Amount of Your Income Affect the Amount of Your Credit?
  • How Is the Credit Claimed?
  • When Must the Credit Be Repaid (Recaptured)?
  • Illustrated Example
• 3. Student Loans
  • Important Changes for 2002
  • Important Change for 2003
  • Student Loan Interest Deduction
    • What Is Student Loan Interest?
      • Include As Interest
      • Do Not Include As Interest
    • Can You Claim the Deduction?
      • Is Someone Else Claiming Your Exemption?
      • What Are Qualified Higher Education Expenses?
      • No Double Benefit Allowed
      • Who Is a Dependent?
      • What Is a Reasonable Period of Time?
      • Who Is an Eligible Student?
    • How Much Can You Deduct?
      • Does the Amount of Your Income Affect the Amount of Your Deduction?
    • How Is the Deduction Figured?
    • How Is the Deduction Claimed?
  • Canceled Student Loan
    • Which Loans Qualify?
• 4. Tuition and Fees Deduction
  • Can You Take the Deduction?
    • Who Cannot Take the Deduction?
    • Who Can Take the Deduction?
  • What Expenses Qualify?
    • Qualified Tuition and Related Expenses
    • No Double Benefit Allowed
      • Adjustments to Qualified Expenses
    • Expenses That Do Not Qualify
  • Who Is an Eligible Student?
  • Who Can Claim a Dependent's Expenses?
  • How Is the Deduction Figured?
    • Does the Amount of Your Income Affect the Amount of Your Deduction?
  • How Is the Deduction Claimed?
• 5. Coverdell Education Savings Account (ESA) - Formerly Education IRA
  • Important Changes for 2002
  • Important Change for 2003
  • What Is a Coverdell ESA?
    • Qualified Education Expenses
      • Elementary and Secondary Education
      • Higher Education
  • Contributions
    • Contribution Limits
    • Additional Tax on Excess Contributions
  • Rollovers and Other Transfers
    • Rollovers
    • Changing the Designated Beneficiary
    • Transfer Because of Divorce
  • Withdrawals
    • Tax-Free Withdrawals
    • Taxable Withdrawals
      • Figuring the Taxable Portion of a Withdrawal
      • Coordination With Hope and Lifetime Learning Credits
      • Coordination With Qualified Tuition Program (QTP) Withdrawals
      • Additional Tax on Taxable Withdrawals
    • When Assets Must Be Withdrawn
      • Exception for Transfer to Surviving Spouse or Family Member
      • How To Figure the Taxable Earnings
• 6. Qualified Tuition Program (QTP)
  • Important Changes for 2002
  • What Is a Qualified Tuition Program?
  • How Much Can You Contribute?
  • Are Distributions Taxable?
    • Figuring the Taxable Portion
    • Coordination With Hope and Lifetime Learning Credits
    • Coordination With Coverdell ESA Distributions
    • Additional Tax on Taxable Distributions
    • Losses on QTP Investments
  • Can You Transfer Amounts or Change Beneficiaries?
• 7. Early Withdrawals From IRAs
  • Important Changes for 2002
  • Who Can Make Early Withdrawals Free of the 10% Tax?
  • How Do You Figure the Amount Not Subject to the 10% Tax?
• 8. Education Savings Bond Program
  • Important Changes for 2002
  • Who Can Cash In Bonds Tax Free?
  • How Is the Tax-Free Amount Figured?
    • Does the Amount of Your Income Affect the Amount of Your Exclusion?
    • How Is the Exclusion Claimed?
• 9. Employer-Provided Educational Assistance
  • Important Change for 2002
• 10. How To Get Tax Help
• Appendices
  • Appendix A. Illustrated Example of Education Credits

Index

[ Click for Table of Contents ]

C

• Cancellation of student loan
• Cancellation of student loan
• Contributions ( See name of benefit )
• Coverdell ESA, Additional tax, Withdrawals, Distributions
• Coverdell ESA, Additional tax, Withdrawals, Distributions
• Coverdell ESA, Contributions
• Coverdell ESA, Designated beneficiary
• Coverdell ESA, Distributions, taxability of
• Coverdell ESA, Distributions, taxability of
• Coverdell ESA, Eligible educational institution, Elementary/secondary
• Coverdell ESA, Eligible educational institution, Higher education
• Coverdell ESA, Expenses, qualified
• Coverdell ESA, Expenses, qualified
• Coverdell ESA, Family members, defined
• Coverdell ESA, Phaseout of contribution limit, Income limits
• Coverdell ESA, Phaseout of contribution limit, Income limits
• Coverdell ESA, Qualified expenses, Elementary/secondary
• Coverdell ESA, Qualified expenses, Elementary/secondary
• Coverdell ESA, Qualified expenses, Higher education
• Coverdell ESA, Rollovers
• Coverdell ESA, Taxability of
• Coverdell ESA, What is an ESA
• Credit ( See Hope credit; Lifetime learning credit )

D

• Dependent's expenses, claiming, Hope credit
• Dependent's expenses, claiming, Hope credit
• Dependent's expenses, claiming, Lifetime learning credit
• Dependent's expenses, claiming, Lifetime learning credit
• Dependent's expenses, claiming, Tuition and fees deduction
• Dependent's expenses, claiming, Tuition and fees deduction

E

• Education credit ( See Hope credit; Lifetime learning credit )
• Education IRA ( See Coverdell ESA )
• Education savings bond program, Form 8815, illustrated
• Education savings bond program, How to claim exclusion
• Education savings bond program, How to figure exclusion
• Education savings bond program, Illustrated example
• Education savings bond program, Income limits
• Education savings bond program, Qualified expenses
• Education savings bond program, Who qualifies for exclusion
• Eligible educational institution, Qualified tuition program (QTP)
• Eligible student, Hope credit
• Eligible student, Hope credit
• Eligible student, Lifetime learning credit
• Eligible student, Student loan interest deduction
• Eligible student, Tuition and fees deduction
• Employer-provided educational assistance
• Expenses ( See Qualified expenses )

F

• Form, 1098-T
• Form, 1098-T
• Form, 1098-T
• Form, 1099-Q
• Form, 8815
• Form, 8863
• Form, 8863
• Form, W-9S
• Form, W-9S
• Form, W-9S

H

• Hope credit, Academic period
• Hope credit, Eligible educational institution
• Hope credit, Form 8863, illustrated
• Hope credit, How to claim credit
• Hope credit, How to figure credit
• Hope credit, How to figure credit
• Hope credit, Illustrated example
• Hope credit, Phaseout of credit
• Hope credit, Tax benefit of
• Hope credit, Who can claim credit
• Hope credit, Who cannot claim credit

I

• Important changes, Coverdell education savings account (ESA)
• Important changes, Coverdell education savings account (ESA)
• Important changes, Education savings bond program
• Important changes, Education savings bond program
• Important changes, Employer-provided educational assistance
• Important changes, Employer-provided educational assistance
• Important changes, Hope credit
• Important changes, IRA withdrawals, early
• Important changes, IRA withdrawals, early
• Important changes, Lifetime learning credit
• Important changes, Lifetime learning credit
• Important changes, Qualified tuition program (QTP)
• Important changes, Qualified tuition program (QTP)
• Important changes, Student loan interest deduction
• Important changes, Student loan interest deduction
• Important changes, Student loan interest deduction
• Important changes, Tuition and fees deduction
• Interest deduction ( See Student loan interest deduction )
• Interest exclusion ( See Education savings bond program )
• IRA withdrawals, early, Amount not subject to additional tax
• IRA withdrawals, early, Amount not subject to additional tax
• IRA withdrawals, early, Eligible educational institution
• IRA withdrawals, early, Qualified expenses
• IRA, education ( See Coverdell ESA )

L

• Lifetime learning credit, Academic period
• Lifetime learning credit, Eligible educational institution
• Lifetime learning credit, Form 8863, illustrated
• Lifetime learning credit, Form 8863, illustrated
• Lifetime learning credit, How to claim credit
• Lifetime learning credit, How to figure credit
• Lifetime learning credit, How to figure credit
• Lifetime learning credit, Illustrated example
• Lifetime learning credit, Phaseout of credit
• Lifetime learning credit, Recapture
• Lifetime learning credit, Tax benefit of
• Lifetime learning credit, Who can claim credit
• Lifetime learning credit, Who cannot claim credit
• Lifetime learning credit, Who cannot claim credit
• Loans, student, Interest deduction

M

• Modified adjusted gross income (MAGI), Coverdell ESA
• Modified adjusted gross income (MAGI), Coverdell ESA
• Modified adjusted gross income (MAGI), Education savings bond program
• Modified adjusted gross income (MAGI), Education savings bond program
• Modified adjusted gross income (MAGI), Hope credit
• Modified adjusted gross income (MAGI), Hope credit
• Modified adjusted gross income (MAGI), Lifetime learning credit
• Modified adjusted gross income (MAGI), Student loan interest deduction
• Modified adjusted gross income (MAGI), Student loan interest deduction
• Modified adjusted gross income (MAGI), Tuition and fees deduction

P

• Penalty ( See , Additional tax under name of benefit )

Q

• Qualified expenses, Hope credit
• Qualified expenses, Lifetime learning credit
• Qualified expenses, Lifetime learning credit
• Qualified expenses, Qualified tuition program (QTP)
• Qualified expenses, Student loan interest deduction
• Qualified expenses, Student loan interest deduction
• Qualified expenses, Tuition and fees deduction
• Qualified expenses, Tuition and fees deduction
• Qualified state tuition program ( See Qualified tuition program (QTP) )
• Qualified state tuition program ( See Qualified tuition program (QTP) )
• Qualified tuition program (QTP), Additional tax
• Qualified tuition program (QTP), Additional tax
• Qualified tuition program (QTP), Beneficiary, Change of
• Qualified tuition program (QTP), Beneficiary, Designated
• Qualified tuition program (QTP), Contributions
• Qualified tuition program (QTP), Family members, defined
• Qualified tuition program (QTP), Loss on investment
• Qualified tuition program (QTP), Taxability of
• Qualified tuition program (QTP), Taxability of

R

• Recapture ( See name of credit )
• Refund of expenses ( See name of benefit )
• Refund of expenses ( See name of benefit )
• Refund of expenses ( See name of benefit )

S

• Section 529 plan ( See Qualified tuition program (QTP) )
• Student loan interest deduction, Academic period
• Student loan interest deduction, Eligible educational institution
• Student loan interest deduction, How much to deduct
• Student loan interest deduction, How to claim deduction
• Student loan interest deduction, Income limits
• Student loan interest deduction, Tax benefit of
• Student loan interest deduction, What interest qualifies, Qualified interest
• Student loan interest deduction, What interest qualifies, Qualified interest
• Student loan interest deduction, Who can claim deduction
• Student loan interest deduction, Who can claim deduction
• Suggestions for publication

T

• Tables, Changes in Allowable Deduction Period for Student Loan Interest
• Tables, Comparison of Education Credits
• Tables, Comparison of Education Credits
• Tables, Coverdell ESA At a Glance
• Tables, Coverdell ESA Contributions At a Glance
• Tables, Coverdell ESA Withdrawals At a Glance
• Tables, Effect of MAGI on Student Loan Interest Deduction
• Tables, Student Loan Interest Deduction At a Glance
• Tables, Tuition and Fees Deduction At a Glance
• Taxpayer Advocate
• Transfers ( See name of benefit )
• TTY/TDD information
• Tuition and fees deduction, Academic period
• Tuition and fees deduction, Eligible educational institution
• Tuition and fees deduction, How to claim deduction
• Tuition and fees deduction, How to figure deduction
• Tuition and fees deduction, Income limits
• Tuition and fees deduction, Tax benefit of
• Tuition and fees deduction, Who can take deduction
• Tuition and fees deduction, Who cannot take deduction

W

• Worksheets, Coverdell ESA - Taxable Withdrawals and Basis
• Worksheets, Coverdell ESA Contribution Limit
• Worksheets, MAGI for a Coverdell ESA
• Worksheets, MAGI for the Hope Credit
• Worksheets, MAGI for the Tuition and Fees Deduction
• Worksheets, Student Loan Interest Deduction Worksheet