the form. You can only claim this credit for two years of schooling.

Lifetime Learning Tax Credit – This is also a credit, deducted from the amount of taxes you owe as opposed to a refund. The credit is run pretty much the same as the Hope Scholarship, it uses the same 1098-T and IRS form 8863. The only difference is it is not limited to 2 years.

The Tuition and Fees Tax Deduction – This is an income deduction that you can use even if you do not itemize. You may deduct up to $4000.00 of tuition and fees, no other expenses are eligible. These must be fees you actually paid, no tuition or fees paid by tax-free scholarships, grants or any other assistance are eligible. There was a last minute extension by congress to allow this deduction this year so it is not properly printed on the tax forms. People claiming this deduction are encouraged to e-file because it has been added to the IRS software, otherwise you must follow special instructions to make sure the form is filled out properly. You will need a form 1098-T from your school and a 1040 tax form.

Interest deduction – You can deduct up to $2500.00 of interest paid on student loans, provided it is not deducted somewhere else on your return.

Remember these benefits and amounts change year to year so make sure you have current information when filing your taxes!

Federal Education Services is a company that specializes in federal student loan consolidation, Stafford loan origination, PLUS and Graduate PLUS loan origination and as a resource for students with questions regarding educational financing. For any questions regarding this article please contact Federal Education Services. A friendly loan specialist can be reached at (877) 222-4727 or you can find us on the web at www.feded.net.

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