What's New?
Hope and lifetime
learning credits. Beginning in
2004, the amount of your Hope or lifetime learning credit
is gradually reduced (phased out) if your modified
adjusted gross income (MAGI) is between $42,000 and
$52,000 ($85,000 and $105,000 if you file a joint return).
You cannot claim a credit if your MAGI is $52,000 or more
($105,000 or more if you file a joint return). This is an
increase from the 2003 limits of $41,000 and $51,000
($83,000 and $103,000 if filing a joint return). For more
information, see chapters 2 and 3.
Student loan interest
deduction. Beginning with
interest due and paid on qualified education loans after
December 31, 1997:
 | A 90-day safe harbor is allowed for
disbursing loan proceeds used to pay qualified
education expenses. |
| Payment of interest by a third
party may be deductible. |
See chapter 4 for more
information.
Student loan repayment
assistance. Beginning in 2004,
student loan repayments provided under certain federal and
state repayment programs are tax free. See chapter 5 for
more information.
Tuition and fees
deduction. Beginning in 2004,
the amount of qualified education expenses you can take
into account in figuring your tuition and fees deduction
increases from $3,000 to $4,000 if your modified adjusted
gross income (MAGI) is not more than $65,000 ($130,000 if
you are married filing jointly). If your MAGI is larger
than $65,000 ($130,000), but is not more than $80,000
($160,000 if you are married filing jointly), your maximum
tuition and fees deduction is $2,000. No tuition and fees
deduction is allowed if your MAGI is larger than $80,000
($160,000). For more information, see chapter 6.
Qualified tuition
program (QTP). Beginning in
2004, a distribution from a QTP established and maintained
by an eligible educational institution (generally private
colleges and universities) can be excluded from income if
the amount distributed is less than or equal to the
beneficiary's adjusted qualified education expenses. See
chapter 8 for more information.
Education savings bond
program. . Beginning in 2004,
the amount of your interest exclusion will be phased out
(gradually reduced) if your filing status is married
filing jointly or qualifying widow(er) and your modified
adjusted gross income (MAGI) is between $89,750 and
$119,750. You cannot take the deduction if your MAGI is
$119,750 or more. For 2003, the limits that applied to you
were $87,750 and $117,750. For all other filing statuses,
your interest exclusion is phased out if your MAGI is
between $59,850 and $74,850. You cannot take the deduction
if your MAGI is $74,850 or more. For 2003, the limits that
applied to you were $58,500 and $73,500. For more
information, see chapter 10.
Business deduction for
work-related education. Beginning
in 2004:
| If you drive your car to and from
school and qualify to deduct transportation expenses,
the amount you can deduct in 2004 is 37½ cents per
mile, up from 36 cents per mile in 2003. See chapter
12 for more information. |
| If your adjusted gross income for
2004 is more than $142,700 ($71,350 if you are married
filing separately), your itemized deductions may be
limited. See chapter 12 and the instructions for line
28 of Schedule A (Form 1040). |
