Education IRA: Annual limit on contribution to IRA increased to
$2,500. Distributions may be used to pay for elementary, secondary, private, or
religious school tuition and expense as well as post secondary expenses.
Also can be used to purchase computer technology or equipment and services.
HOPE and lifetime learning credits may now be claimed in year that IRA
distribution excluded from taxable income (cannot use IRA funds to pay for
expenses that are used to calculate these credits).
Qualified Tuition Savings Plans (Sec. 529): Distributions from these
plans are now tax exempt if used to pay qualified education expenses. Also, HOPE and
lifetime learning credits can be claimed in same year that distributions are
excluded from taxable income (cannot use the QSTP funds to pay expenses that
are used to calculate these credits).
Student Loan Interest: Sixty (60) month limit on deduction of
student loan interest eliminated. Phase out amount increased.
Above the Line Education Deduction: Starting in 2002 and continuing
through 2005.
