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Everyone needs to read the Wall Street Journal today. I have said it as soon as 529's were introduced, 'you can only move once and in Maryland you can NOT move to a money market'. This makes them way too risky. But of course everybody I talked with about this point pushed it aside. Coverdell account is the way to go.

Are there any tax breaks for college education at all for someone with an AGI above $175k?

Last line ( post below) is a duplicate John G.

Hi all. The section 'No deduction can be claimed for expenses paid with tax-free withdrawals of earnings from a 529' I assume that if I have 25k in a 529 and 1K is earnings I still can take deductions for 24K. I guess when I start to take the money out I will have to keep it straight.
My situation is that I have a high school Senior and a junior so I will Have 5 years of college to pay. Since I will only have 529 money for the first couple of years (state college) should I pay for the college room and board from the 529 money since 529 oks this use but not deductible with the fed rules. I will than use other monies, loans for tuition which is deductible for the fed deductions such as the lifetime / educational credits?
money, loans for tuition which is deductible for the fed dudutions such as the lifetime / educational credits? Thanks John G.

Re: the education credits vs. the tuition deduction, you are correct. Whether you take the Hope or Lifetime, either way it will most likely be a better option for you than using the deduction for the reason you stated. A deduction just lowers the tax bracket you are in. A credit actually takes money OFF of taxes you owe or if you are due for a refund, ADDS to the amount of your refund. So that equates to actual money in your pocket-I'd much rather go that route! The people who the deduction might benefit more are those in the high income brackets who, by claiming it, lower it. For those making alot of money, that can be more beneficial than the actual money back.

I am in graduate school, and got literature from them telling me that even though I have been paying tuition with Stafford loans that I can still claim the Lifetime learning credit. Does that make sense to anybody? I also have a child in second year who I could use the Hope for if that is the case, but I really only put a few hundred out in expenses for myself.

Sense you only have one student Lifetime is the best deal but, if you have more then one in college they both cannot claim Lifetime in one return. You are only allowed one Lifetime credit per return. The second student would have to take a Hope credit.

i just recently finished my taxes. trying to maximize on my refund with my daughter in college i found that the lifetime deduction makes the most sense. ex: 12000 paid to school, 10000 max allowed, you get 20% of 10000 or 2000 off the bottom line. hope is only 1650 for the 2yrs. if i take tuition and fees adj.(4000) it comes off the gross adjusted income which brings your taxable income down but not off the bottom line. with a student in college with a dual income around 80000. to me the lifetime deduction is a no-brainer unless im missing something here. took the hope deduction last yr. but maybe i should do an amended(1040x) return 4 2006. assuming im right but looking 4 confirmation. thanks, paul t.

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College Tax Breaks: http://bit.ly/1XGYug