What is your benefit? 2

Tax credit

(non-refundable)

Withdrawals are tax free

No 10% additional tax on early withdrawal

Deduction to arrive at adjusted gross income

(above-the-line)

Prepay future college expenses; withdrawals are tax free

Interest is excludable from income

Employer benefits are excludable from income

Deduction to arrive at adjusted gross income

(above-the-line)

What is the annual limit?

Up to $1,500 per student

Up to $2,000 per family

$2000 contribution per child under 18

Amount of qualifying expenses

$2,500

None

Amount of qualifying expenses

$5,250

2003 $3,000

2004 & 2005 $4,000

What expenses qualify besides tuition and required enrollment fees? 2

None

Books, supplies, & equipment; Room and board if at least half-time attendance at elementary, secondary or higher educational institution (public or private)

Books, supplies, & equipment; Room & board if at least half-time attendance

Books, supplies, & equipment; Room & board; Transportation; Other necessary expenses

Books, supplies, & equipment; Room & board if at least half-time attendance

Payments to Qualified Tuition Programs and ESAs

Books, supplies & equipment

N/A

What education qualifies:

1st 2 years of under-graduate

All undergraduate and graduate levels

What other conditions apply?

Can be claimed only for 2 years; Must be enrolled at least half-time in a degree program; no felony drug conviction

Applies to expenses paid and for school attendance after June 30, 1998

Contributions not deductible;  Must withdraw assets at age 30

Must receive entire balance or begin receiving withdrawals by April 1 of year following year in which age 70-1/2 is reached

Must be enrolled at least half-time in a degree program

Tax-deferred earnings go untaxed when withdrawn to pay qualified college expenses

Applies only to qualified series EE bonds issued after 1989 or series I bonds

Cannot also claim an education credit  or higher education expense deduction

Not available if claiming hope or lifetime learning credit; if using educational IRA or educational savings bonds to pay tuition and some distributions from QTP's.

At what income range do benefits phase out?

$42,000 - $52,000

$85,000 - $105,000 for joint returns

$95,000-$110,000;

$190,000-$220,000 for joint returns

N/A

$50,000-$65,000;

$100,000-$130,000 for joint returns

N/A

2001:  $59,850-$74,850;

$89,750-

$119,750 for joint  returns

N/A

$65,000-$80,000