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Flight Attendant and Pilot
Educational Tax Benefits

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Hope Scholarship Credit:

Taxpayers may be eligible to claim a nonrefundable Hope Scholarship Credit against their federal income taxes. The credit may be claimed for qualified tuition and related expenses of each student in the taxpayer's family who is enrolled at least half-time in one of the first two years of post-secondary education and who is enrolled in a program leading to a degree, certificate, or other recognized credential. The maximum credit for a taxable year is $1,500 per qualified student. (100% of the first $1,000 plus 50% of the second $1,000). And is limited to two tax years per student.

The credit is for payment of tuition and related expenses, (expenses include required fees only, not room and board, books, transportation or student activity expenses) made on or after January 1, 2000, for academic periods beginning on or after the same date. Payments may come from loans, student earnings, gifts, inheritance or savings. Payments coming from Pell Grants, tax-free scholarships or employer-provided educational assistance are not allowed to be taken into consideration when calculating the credit. In a year where the student receives a tax-free Education IRA, none of the student's expenses will be allowed unless the tax-free status of the IRA is waived.

The amount a taxpayer may claim as a credit is gradually reduced for taxpayers who have modified adjusted gross income from $40,000 to $50,000 for filing single and $80,000 to $100,000 for filing jointly. Married filing separate taxpayers will not be able to take the credit.

Lifetime Learning Credit:

This credit may be claimed for qualified tuition and related expenses of the taxpayer, spouse and dependents who are enrolled in eligible educational institutions without regard to the number of credit hours a student is taking or whether or not they are seeking a degree. The credit amount is equal to 20% of the taxpayer's first $5,000 of out-of-pocket qualified tuition and related expenses for all the students in the family (Unlike the Hope Credit, which is per student). The maximum credit is $1,000 until the year 2002, when it will be increased to $2000. The credit is for payment of tuition and related expenses (expenses being required fees only) made on or after January 1, 2000.Unlike the Hope Scholarship Credit, which is limited to the first two years of post-secondary education, there is no limit to the number of years in which a Lifetime Learning Credit may be claimed. Payment sources and phase out amounts are the same as the Hope Scholarship Credit.

Education IRA:

Taxpayers may deposit up to $500 per year into an Education IRA for a child under the age of 18. Amounts deposited grow tax free until distributed and the monies will not be taxed if used for higher education expenses. Since the Hope and Lifetime Learning Credits may not be taken in the same year a student takes a tax-free withdrawal from an Education IRA, it may not be to the taxpayers advantage to use this as a savings vehicle unless the child is very young, please consult your financial advisor prior to investing.Student Loan Interest Deduction: Taxpayers who have taken loans to pay the cost of attending an eligible education institution for themselves, their spouse, or their dependents may be able to deduct interest they pay on these loans. This is a reduction in taxable income, unlike the Hope and Lifetime Learning Credits, which are reductions in federal income taxes. The deduction is available for interest payments due and made on or after January 1, 2000 and are only allowed on the first 60 months of required payments on the loan. The loans must have been used for tuition, fees, room, board, books, equipment and other necessary expenses in both post-secondary and graduate school. The loans may have come from any source, not just federally guaranteed or subsidized loans. The amount of the taxpayer's deduction is gradually reduced for single taxpayers with modified adjusted gross income between $40,000 and $55,000 and married filing jointly taxpayers between $60,000 and $75,000. The maximum deduction for the 2000 tax year is $2000 increasing to $2500 for the year 2001 and after.