<p>I just got my termbill. about $8500 for the 1st semester. my parents are probably going to pay most of it. I dont have 529 or Education saving plan. </p>
<p>How would my parents maximize tax deduction?
i know there's hope and learning credits, but is there anything better?</p>
<p>Depending on income level, there is also the tuition deduction. Your parents should do their taxes using the deduction or the credit and see which benefits them most. Remember that in some (if not all, I don't know all states) the deduction affects the state tax also.</p>
<p>Don't get too excited about tax deductions. Even the most lofty are small compared to what you are paying for your tuition. Your family will get one of the above mentioned tax breaks...but you cannot take all, only one.</p>
<p>is it possible to eliminate most of the income tax paid on my parents' earning that goes into my tuition?</p>
<p>thanks in advance</p>
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<blockquote> <p>is it possible to eliminate most of the income tax paid on my parents' earning that goes into my tuition?>></p> </blockquote>
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<p>What do you mean?? Your tuition is not going to net your family a very large savings on their taxes. There is some savings, but it is not nearly what they will be paying in tuition.</p>
<p>Basically, your parents are allowed a $2000 credit if they make less than $160,000 adjusted gross, and $4,000 if they make less (I think the cutoff is $120,000). Also, the credit cannot be more than the actual amount paid for college tuition. </p>
<p>In answer to your question, the money paid for tuition (or other college expenses) is not deductible from gross income.</p>
<p>The other thing your parents should know is that they can avoid paying the extra taxes (extra 10% normally charged) on money taken out early from their retirement plans to pay for your college if they provide over half your total support. They have to make the payments in the same year that they take the money out of the plan, however.</p>