TurboTax 2008, 2009

TurboTax Tax Return Calculator for 2008, 2009

TurboTax Tax Calculators

Use these free tax calculators from TurboTax to get a preview of your 2008, 2009 income taxes.

Whether you want to know how much your tax refund will be, how much you'll pay in taxes, which deductions you can take or how much your home mortgage will save you in taxes, TurboTax has you covered.

Tax Refund Estimator - How much will your tax refund be this year?

Changes in your life—like a salary or job change, new house or car, or additions to your family—might affect your refund. This tax calculator helps you determine how much you are likely to pay in taxes for 2008—or how big your refund will be. The latest changes to the Alternative Minimum Tax (AMT) are factored in for increased accuracy.

Tax Rebate Calculator - Will you get a Irs Federal stimulus tax rebate check from the U.S. government this spring?

The government will not automatically send you a stimulus check if you qualify. You must claim this rebate on your 2008 tax return. This could be a huge potential credit for many tax payers that have been laid off or hit hard by the current economic situation.

Average Tax Rate Calculator - What's my average tax rate amount?

Want to know the average tax rate you'll pay on your income? Plug in your income figures and this handy tax calculator will show what percentage of your income will go to taxes.

Home Loan Tax Saver - How much will my mortgage save me in taxes?

If you paid interest or points on a home loan, chances are you can deduct those payments from your income taxes. This tax calculator can help you find out how much your mortgage will save you on your taxes.

Paycheck Tax Withholding Calculator - How much will I take home after tax withholdings?

Are you withholding enough—or too much—from your paychecks? This valuable tool looks at your entire tax situation, including your other income and expenses, and figures out what you'll actually owe on your taxes for the year. The calculator then determines how much you should have withheld to cover what you'll owe for the year, without giving Uncle Sam a big loan.

Deduction Finder - Am I claiming all the deductions I deserve?

Are you missing out on deductions you deserve to claim? Use this tax calculator to help identify over 350 tax credits and deductions available and which ones you are eligible for.

Free Tax Calculators at TurboTax

How to Reduce Federal Income Tax 2009, 2010‏

Like Most Americans, you probably feel you pay too much income tax, especially federal income tax. 

While the state you live in may tax you for the property you own, and will always collect sales tax on almost everything you buy, state tax rates are very small compared to federal income tax rates. That is why it is so valuable to find ways to cut your federal income tax. 

In order to reduce federal income tax, you have to reduce income – at least taxable income. The income tax goes up as your income goes up. The trick then is to keep your cash flow increasing while reducing the amount you have to report for federal income tax purposes.

One of the most important ways of doing this is to find all of the deductions you are entitled to take.  In the past, the mortgage interest deduction has been the biggest, but as real estate values are in decline and credit is tight, you need to look for other helpful deductions as well. 

Most of the state taxes you pay are deductible. Don’t forget to personal property taxes on cars, boats, trailers, and other large items – usually those that are mobile. There are other itemized deductions like medical expenses and other business related costs you may be able to deduct.

Starting your own business is a great way to save on federal income tax. All of the ordinary and necessary items you purchase for the business are deductible.

Retirement accounts, exemptions for dependents and other personal exemptions, and tax credits are other items that offer deductions and reductions to the amount of tax you owe. 

Let TurboTax help you find all of the exemptions, deductions and credits you need. Go to TurboTax Online to start finding ways of reducing your federal income tax today.

How do Tax Deductions Work for 2009, 2010

This is a question every taxpayer wants to understand.  You want to minimize your taxes and be sure you are doing this in the right way.

For starters, deductions offset income.  They do not directly offset the tax.  Tax credits, on the other hand, are a direct offset to the tax itself.  Credits, therefore, save you more money, but credits are unique and rare.  They are only given for items the government finds particularly deserving, child care is one example. 

This does not mean that deductions are not highly valuable.  After all, if you could reduce your taxable income to zero, you would pay no tax at all.  The key is to take the deductions you are entitled to, and find the right category for your deductions.

An important place to start is to have a system that tracks all of your expenses.  They need to be tracked in categories that can easily be placed into tax deductions.  Business expenses, retirement savings, alimony, moving expense – all of these types of expenses are deductible without reference to meeting a certain amount before you can deduct them. 

Sometimes they do have limits.  So you need an expert, like TurboTax.com, to walk you through the calculations.

Then there are itemized deductions.  These can be tricky.  They include medical expenses, mortgage and other interest, other taxes you pay, and certain professionally related, deductible expenses you may not always consider.  Itemized deductions are always subject to different rules for each category of expense. 

You want to take all the deductions you are entitled to receive. Let TurboTax Online be your source for helping you be sure you limit your own taxes as much as you can.

 

Federal IRS Inheritance Income Tax Return Laws & Rates 2009, 2010

To determine if you will or will not have to file a return on your inheritance you will first need to form a list of all assets received and put a fair market value on each item. If the fair market value of all money and assets exceeds $2,000,000.00 then you will need to file a federal return.

The amount will vary from state to state as far as needing to file a state return as well. The amount the state allows before a return is required is generally much lower than the amount the federal return requires.

Reporting Inheritance

When an inheritance is received you will be required to file a return as the beneficiary who acquired the assets. If the assets of the deceased were not named to a certain individual upon their death then the administrator of the estate will be required to file their final tax return on their behalf. This return must be filed by April 15th of the year after the individualʼs death.

IRAS

If you have inherited an IRA or retirement account this will be considered as income on your return. The person who receives this type of inheritance will be required to pay the taxes on these retirement and savings accounts. There is a new law that will allow you to spread out your disbursements and tax liabilities for non-spouse beneficiaries.

Savings Bonds

If you have inherited a bond then you may be responsible to pay taxes on all interest that was earned on the bond. This tax liability will not be required to be paid until the bonds are cashed.

TurboTax Online offers free forms and tax calculators to help you file your inheritance return. Visit TurboTax Online to receive step by step instructions on filing your return. return.

Self Employed Calculator, Calculate Self Employment Tax 2009, 2010

The self-employment tax is added on top of the income tax you must pay as a self-employed individual or married couple. This creates a very heavy burden that you probably would prefer to avoid.

In essence, the self-employment tax is in place of the share of social security and medicare taxes normally paid by an employer on behalf of an employee. Since the self-employed person is both an employer and employee, he must pay the tax for himself, whether or not he is on the company payroll.

As the tax tracks the income of the self-employed person, it is an additional layer of tax, on top of the income tax itself. This places an even greater premium on planning your business activities to reduce taxable income, even while managing your business for profitability. The good news is that most of what you do to reduce your ordinary taxable income will also reduce your self-employment tax as well.

But there are at least three items to consider that are different from calculating what is taxable for ordinary income tax purposes. First, only the first $102,000 of income is subject to self-employment tax. If you are fortunate enough to have income that is likely to be significantly greater than this, you will not have to worry about this extra layer of tax as you budget and plan for your income.

Second, 50% of the self-employment tax itself is deductible from ordinary income. This creates a negligible planning opportunity because this amount would be deductible for any employee, yet it is worthy of consideration in your individual situation as you are preparing your returns.

The last consideration is that, rarely but occasionally, it can be to your benefit to be treated as an employee who is NOT self-employed in order to avoid the tax altogether. Calculators are available through TurboTax Online or other tools your tax preparer may have to tell you if you have a unique situation where this may apply.

Cash Out 401k, Early Cashing Out 401k Penalties 2009, 2010

Are you thinking about cashing out some of your retirement income? It may seem like the best solution to current financial trouble. There are many consequences to consider with choosing this option. Most 401K plans will allow employees to borrow against their retirement and pay it back over 5 years with interest. This is the best option if you truly need to borrow against your savings as long as you pay it back within the 5 years.

How Much Will It Cost Me?

There could be trouble along the way if you get laid off from your current job. If you do become unemployed and you need to repay your retirement loan, you are usually only allowed 60 days from the time your employment ended to replenish any funds to your retirement account. If you do not meet that deadline then your loan turns in to a distribution. Then you will have to pay taxes on it as well as a possible 10% penalty. So you have not only decreased your retirement savings you may now end up with a pretty significant tax bill.

Hardship Distributions

The hardship distribution is for emergency financial situations. You may be able to take one of these distributions if you need to pay for funeral arrangements or if your home is under foreclosure. You will still be responsible for any tax and penalties from this type of distribution. So if you are currently experiencing financial hardship we suggest receiving some type of tax advice to make sure you are making the best decision for your situation.

TurboTax Online offers free tax help and advice. Please visit TurboTax Online to find out more about cashing out your 401K.

Federal Energy Efficient Income Tax Rebate 2009, 2010

Along with the enormous Wall Street bailout passed by Congress and signed by President Bush came a handful of tax breaks to “middle America”, including energy tax rebate or credits for certain activities that display a disposition toward energy efficiency.

Tax credits for home improvements that substantially enhance the energy efficiency of a house, i.e. windows, doors, roofs, insulation, HVAC, non-solar water heaters, etc. were created. In part, the hope is that responsible homeowners that may be putting off decisions to make improvements because of economic hardship, would consider making improvements that could provide costs savings in the long haul, by offering a tax incentive now. 

Like many issues under the tax laws, however, timing is everything.  These credits will be available for expenditures made in 2009, but not in 2008. If you made similar improvements in 2007, but failed to take the credit that was then available – the law permits you to amend your return and take them now. 

Tax credits for solar energy systems and fuel cells were extended under the new law through 2016.  Also, new tax credits were created for wind energy systems and plug-in hybrid electric vehicles. Builders of new energy efficient homes will now qualify for a credit and the deduction granted to owners and designers of energy efficient commercial buildings were also extended in the legislation.

The United States Department of Energy and the Environmental Protection Agency each have developed and provide charts and other information for homeowners, taxpayers and preparers that show all of the breaks that may be available for you in 2008 and beyond.

If you have recently made an energy efficient purchase or improvement you may find the tools at TurboTax Online helpful in determining the credit you may be eligible for. TurboTax offers Free tax calculators & software to help you maximize your tax return.

Long Term & Short Term Capital Gains Tax Rate

Your capital gains tax rate will be figured out depending on the holding period and the type of investment asset. You will be taxed federally on your capital gains and may also be subject to being taxed by your state as well. This schedule displays the current long term and short term Federal capital gains tax rates:

• Long Term Capital Gain longer than one year... 5% for taxpayers in the 10% & 15% bracket, 15% if you are in the 25%, 28%, 33%, & 35% bracket 

• Short Term Capital Gain less than a year... Standard income tax rates up to 35%

• Small Business Stock Gains at least five year... 28%

• Real Estate longer than one year... 5% or 15% after any exclusion amount

• Collectibles longer than one year... 28%

• Collectibles longer than five years... 28%

Beginning in 2008 you will see a change if you are in the 10% or 15% tax bracket. To qualify for this new tax break your income must be below $32,550.00 if you are filing single and less than $65,100.00 if you are married. The new tax rate will be zero for long term capital gains and short term capital gains.

Long term capital gains are taxed at a lower rate than what your regular income will be taxed at. Depending on your income for that tax year you may be pushed in to a higher tax bracket if you received capital gains. This could result in a combination of rates for your income and capital gains.

With so many possible tax scenarios, you may worry a few things will slip through the cracks.That won’t happen with TurboTax Online. We help you find every deduction you deserve—and even search your return for missed deductions—so you don’t overlook any opportunity to save.

2009, 2010 Child Tax Credit Information & Calculator

If you have children who are under 17 as of the end of the tax year, you can get a $1,000 tax credit per child on your tax return.

Because this is a credit, not a deduction, you get to take those dollars right off your tax bill. That makes this much better than a deduction would be, which would just reduce the income you use to determine taxes.

And the credit does not affect the exemptions you take for dependents. The credit is in addition to your exemptions.

To claim the credit you must meet these tests, to qualify for the credit:

• The dependent must be a U.S. citizen or resident, and a blood or adoptive son, daughter, stepchild, or grandchild. Foster children qualify if they lived with you as members of your household for all of 2005.
• You must report each qualifying child's tax identification number (TIN) (usually the child's Social Security number) on your return for the year that you take the credit.

You can calculate your child tax credit using the worksheet provided in the instructions for Form 1040, line 52, or Form 1040A, line 33.

Or, let TurboTax walk you through the entire qualification process step-by-step.

How Much You Get

In most cases, the child tax credit is limited to the amount of tax liability on your return (in other words, if your credit is bigger than your tax liability, your tax liability is just reduced to zero, and the rest of the credit is lost).

In certain cases, though, you can get a child tax credit refund when the credit exceeds your tax liability. This means that you would get a refund of the difference between your tax credit and what you owe in taxes. This refundable child tax credit is called the Additional Child Tax Credit, which you calculate on Form 8812.

This credit is refundable for families with three or less qualifying children, to the extent of 15 percent of taxable earned income in excess of $11,000 for 2005. For families with four or more qualifying children, the refundable amount may be the excess of the family's social security tax over the earned income credit, or the extent of 15 percent of taxable earned income in excess of $11,000, whichever is greater.

Herb and Susan had a bad year, making only $25,000 on their sheep ranch. They have four children under 17. Their taxable income was zero, so they owed zero in taxes, but they got an additional child tax credit refund worth $1,835, or the excess of the family's social security tax over the earned income credit, whichever is greater.

The otherwise allowable child tax credit is phased out for taxpayers with modified adjusted gross income (defined below) above certain thresholds. The amount of the credit is reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds the threshold amount. The threshold amount is:

• $110,000 in the case of a joint return
• $75,000 in the case of an unmarried individual
• $55,000 in the case of a married individual filing a separate return

The total you can take is $1,000 per child, although part of that can be a tax credit, and the rest in a refund. Families with three or more children can calculate the refundable credit as they did last year if it results in a larger amount.

If you pay the Alternative Minimum Tax, you can use the child tax credit to offset that.

Something to keep in mind: the child tax credit rate of $1000 per child has been extended through 2009.

You can use the Free Tax Estimator provided by Turbo Tax Online to estimate your Child Tax Credit. You can also find plenty of Free help & information to Prepare & File Your Taxes Online and get all the tax deductions and credits possible.

How to Track Your Income Tax Refund Check for 2009, 2010

If you have filed your return and have not received your refund check yet, you can track the status of your check. Refund information on the IRS website will show you only the most current tax year available. You will not be able to view the status of past returns.

If you have an amended return, you will not be able to view this on the IRS website either.

There are many reasons why you have still not received your refund check. So make sure the address is correct, if it is not then it can be updated electronically.

To track your refund check, you will need to have your social security number, filing status, and the exact amount of the refund. If you do not have this information correct you will not be able to continue and track your refund check.

This information should be available within three days of the IRS receiving your refund as long as you e-filed. If you sent in a paper return then it could take three to four weeks to track your federal return. If you are waiting on a refund check it will let you know the date it was mailed or the expected date of deposit into your bank account.

If you use an online tax preparation service, then you can usually track your refund directly through their website. This is usually much easier and does not require you to have any information available except for your login information. They even email you updates as your return is being processed.

To track your federal refund, visit TurboTax Online. TurboTax online offers many benefits for using their tax preparation software.

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2008, 2009 Tax Credit for New Windows

Unfortunately if you installed new energy efficient windows in 2008 then you will not be able to take advantage of the new energy tax credit signed into law on February 17, 2009.

To qualify for the new 30% credit then the windows must have been placed in service between January 1, 2009 and December 31, 2010. The previous energy credit expired before 2008 so if you put off putting in those new windows then you may have made a smart choice.

As of January 1^st, 2009 any new windows that are installed and qualify as energy efficient could earn you up to a 30% credit of your purchase.

This credit will not cover the cost of installation or sales tax. The whole goal of the new plan is to reduce the amount of electricity and natural gas that we use. So don’t forget about the savings you will receive in energy costs.

The windows must have U-Value of .30 or less and a SHGC of .30 or less. The U-Value is designed to measure the amount of heat transmission through the window. The lower the U-Value the better.

The SHGC will measure how the window blocks heat from the sun. The lower the amount of SHGC the better. If you have trouble determining these values then keep an eye out for the Energy Star logo. These items are sure to qualify for the credit. So if you have put off any energy efficient purchases this will be the year to take advantage of the credits offered for these purchases.

TurboTax online takes the worry out of deciding which forms to use to claim this credit. Just answer a few simple questions and TurboTax will fill out the forms for you.

Energy Efficient Windows Tax Credit 2008, 2009

What makes a window “energy efficient”?

There are many components to a window that make it energy efficient. The frames of the windows have been improved to reduce heat transfer and insulate the window better. The windows come with a coating that reflects infrared light that helps keep the heat inside and to prevent heat from getting in during summer months. If you have purchased double pane windows than you may be surprised to learn that a special non-toxic gas has been inserted between the panes that will insulate much better than air. They have also developed new edge spacers that will help reduce the flow of heat and to help prevent any condensation.

What does this mean for you?

If you plan on purchasing energy efficient windows this year then you may be able to take advantage of a great new tax credit aimed. This credit will be applied against any new window purchasing during the upcoming tax year that qualifies as energy efficient. You could receive a tax credit for up to 30% of your window purchase that caps out at a $1,500.00 credit. The windows must be placed in service from January 1^st, 2009 through December 31, 2010 The windows must be federal guidelines to be considered energy efficient.

To learn more about the energy efficient guidelines, visit TurboTax Online. Just answer a few simple questions and TurboTax will determine the amount of credit you are eligible for.

Current Mileage Tax Deduction for 2008, 2009

Business Purposes

As of July 2008, you are able to deduct up to 58.5 cents per mile driven for business. This is almost a 9 cent increase from the previous amount allowed. This amount covers cars, vans, pickups, or panel trucks.

This deduction can be used if you are an employee of a company and use your own vehicle or if you are self-employed. This amount will decrease in 2009 to 55 cents per mile as the piece of gas has decreased.

Medical & Moving Purposes

You may deduct mileage for either one of these expenses but you are limited to 14 cents per mile. For 2009 this amount will be 24 cents per mile. Your move must be related to the start of new work, at least 50 miles farther from your previous home, and you must work full time for at least 39 weeks during the first 12 months after your move. To deduct medial related mileage expenses then the medical appointment must fall under deductible medical expenses.

Charitable Driving Purposes

You may deduct up to 14 cents per mile driven for charitable purposes. This amount will remain unchanged. The organization that the driving is done for must be a qualified organization and you must be using your vehicle to provide some type of free service to the organization.

To find even more mileage deductions, visit TurboTax online.TurboTax online offers maximizers to get you the most savings possible.

College Tax Credit for 2008, 2009

College Tax Credit for 2008, 2009

College Tax credits can provide a great savings for students and their families.

There are currently two different programs that allow you to take a tax credit rather than just the regular deductions.

Hope Credit

The Hope Credit will provide a credit for your first two years of higher education. To be eligible for this credit you must meet the following guidelines.

• Must be currently enrolled in college at least half-time.

• You must not have completed more than two years of undergraduate classes.

• To receive the entire credit of up to $1,800.00, your income must be below $48,000.00.

Lifetime Learning Tax Credit

This credit is different from the Hope Credit as you can claim this credit for your entire college career. For this credit the following rules apply:

• The credit will allow you to claim up to 20% of expenses paid for tuition.

• Your income must also be below $48,000.00 to take the full credit.

• The maximum credit will allow you to take up to a $2,000.00 credit.

Both of these credits can be claimed on your federal tax return by completing either form 1040 or form 1040A. You are not able to take both of these credits at the same time and must pick one. These credits will allow you to reduce your federal tax liability dollar for dollar before your taxes are calculated. Taking either one of these credits could be more beneficial for you than taking the deductions so be sure to find out if you are eligible for these credits.

TurboTax Online offers free tax calculators. Visit TurboTax Online to find out if you qualify for any college Tax Credits.

Education Tax Benefits for 2008, 2009

There have been some new and improved credits and deductions allowed for student and their families. If you are not familiar with these you may be losing out on huge savings when it comes to your tax bill.

Hope Credit

This scholarship was recently improved and now provides almost a $700.00 increase. You can also claim this credit for four years versus the previous two year maximum. This credit can also be taken for each individual in the family that attend college.

Lifetime Learning Tax Credit

The Lifetime Learning Credit will allow you to take up to a $2,000.00 for any higher education expenses. This credit will be more beneficial to you if you have only one person in your family that will be attending college as the Hope Credit will allow you to take for each individual as the lifetime learning credit will only allow a certain dollar amount.

Student Loan Interest

This is a very easy deduction to take as you do not have to itemize for this one. You can deduct up to $2,500.00 in student loan interest. If you have high income levels this amount will begin to decrease.

Tuition Deduction

You can deduct up to $4,000.00 of your tuition expenses without itemizing. You may not take this deduction if you claimed a education tax credit. If you have high income levels then this would probably be the best option to choose.

There are many more benefits available, to learn more visit TurboTax Online.

Federal Adoption Tax Credit Amount for 2008, 2009

If you are planning on adopting a child then you may be able to receive a tax credit. The credit will apply for expenses that were paid in the previous year that the adoption was finalized if the adoption was a domestic adoption and not an international adoption.

The following is a list of qualifying expenses:

• Adoption Fees

• Court Costs

• Attorney Fees

• Necessary Travel Related Expenses

The expenses must be incurred while adopting a qualifying child. This means that the child must be under the age of 18 and a United States citizen. The child will qualify once the adoption is finalized if they were not previously a United States citizen. The credit will not include adoption expenses if you are planning on adopting your spouse’s children.

How Much?

The total credit that is allowed to be taken is $12,150.00 per qualifying adoption. This is not an annual amount and will apply to each adoption. This credit can be applied over a six year period or until the cap is reached. To take this credit you will need to complete Form 8839. You must be sure to deduct any contributions made by your employer. You may also be able to receive tax benefits from your state as well so be sure to check that out as well. This credit can still be taken if the adoption is never finalized as long as the adoption was domestic. The credit amounts will begin to decrease if your income exceeds $182,180.00.

To learn more about the Federal Adoption Tax Credit, visit TurboTax Online. TurboTax Online will provide you with all of the up to date adoption credit information.

Special Needs Adoption Tax Credit for 2008, 2009

The special needs adoption tax credit will provide a credit for adoption expenses in regards to the adoption of a special needs child. The credit is used to reduce your tax liability. It will not provide you a refund but the credit can be carried over in to future tax years to reduce your tax liability.

A special needs child is considered one of the following:

• Older Children

• Minority Children

• Sibling Groups

• Children with Medical Needs

• Physical Handicaps

• Mental Handicaps

• Test Positive for HIV

• Forms of Pre-Natal Exposure to Drugs or Alcohol

They do not necessarily have to be disabled to be considered special needs in regards to adoption. Most of the time these children are in foster care and are above the age of five.

The credit can be applied against any adoption related expenses that are considered qualifying expenses. Such as; attorney fees, adoption fees, travel expenses, etc. The maximum amount that can be claimed is $12,150.00 per adoption. The full credit can be taken for special needs children even if the expenses do not reach the limit.

If the adoption is an international adoption then you will not be able to claim the credit until the adoption is finalized and the child becomes a United States citizen. If the adoption is a domestic adoption then you can claim this credit even if the adoption does not go through. The special needs adoption tax credit does not apply if the child is your spouse’s child that you are adopting.

If you are planning on adopting a special needs child, visit TurboTax Online for more helpful information.

What is a Ponzi Scheme?

The words Ponzi scheme have recently been heard all over the new with the arrest of Bernie Madoff. Many Americans are unfamiliar with what a Ponzi Scheme actually is.

A Ponzi Scheme is when the operator of the scheme attracts investors by offering large returns on their investments. They even offer guarantees on the amount of returns which makes these businesses hard to turn away. The operator essentially takes the investors money and does not invest it at all. They simply keep on collecting more money and using other people’s investments to pay out returns. This scheme will bring in a lot of money but will fall apart as soon as the cash flow slows down.

Many Americans have lost their entire life savings in the latest Ponzi scheme that was operated by Bernie Madoff. He has been convicted of the largest scheme of it’s kind in American history. He managed to swindle investors out of almost 65 million dollars.

If you or someone you know has lost money in a Ponzi scheme, the government has recently made changes to tax laws to allow you to reclaim a small portion of your investment losses. The investment loss can be claimed on your return as theft, capital loss, or as phantom income. This will allow you to deduct your losses in a fraudulent business such as this. Taking this deduction could possibly help you regain almost 30% of your original investment.

For more information on Ponzi scheme losses, visit TurboTax online.

College Tax Deduction for 2008, 2009

There have been some new additions to the list of deductions you can take if you have paid college tuition. Starting out this year you can deduct up to $4,000.00 dollars of tuition paid. This is the maximum amount that can be claimed annually. The amount does not change based on family size or how many individuals in the family are currently enrolled in college.

Of course there are some requirements that must be met:

• If you are married, you must file jointly. You are ineligible for this deduction if you are married and file separately.

• If you are single your adjusted gross income must be below $65,000.00 to qualify for the whole amount. Your deduction will be reduced as your income exceeds this amount.

• The individual taking the deduction cannot be claimed on anyone else’s return.

• This deduction cannot be taken if you have paid your college expenses with earnings that are from a Section 529 plan or from a Coverdell Education Savings Account.

If you are not familiar with a Section 529 plan, it is a state sponsored college savings plan that is aimed at provided a tax advantage. There are two different types of 529 plans. They are a prepaid tuition plan and a college savings plan.

Prepaid Tuition Plans

Prepaid tuition plans will let you buy a future college education at the current prices. There can be plan fees involved, depending on when you start the plan and when you intend to use it.

College Savings Plan

A college savings plan will allow you to contribute money that will be tax-deferred and all withdrawals will be tax free if they are used for educational expenses. College savings plan will only allow you to contribute so much annually.

To learn more about college tuition deductions, visit TurboTax Online. TurboTax Online offers free deduction maximizers.