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This provides significant post-mortem tax planning opportunities. There are many other significant changes in addition to those outlined. IRA distribution rules still remain somewhat confusing, but the IRS has made the rules far simpler and more user friendly.


Tim Heldman is a principal at Thomas D. Heldman CPAs & Associates.

If you or your dependents incurred college costs in 2000, Uncle Sam may help underwrite them. The largest credit allowed is the HOPE Credit. This applies only for the first two years of postsecondary education. The credit is for 100 percent of the first $1,000 of qualified tuition and fees paid during 2000 plus 50 percent of the next $1,000. To be eligible, the student must be enrolled at least half-time.

The Lifetime Learning Credit is available for graduate or undergraduate study. This credit is equal to 20 percent of the postsecondary tuition and fees you pay during the year. The credit is limited to $1,000 per year. The credit can be used for an unlimited number of years. Both of these credits are phased out for married couples if modified adjusted gross income exceeds $80,000 ($40,000 for single taxpayers). In order to claim the credit, you must complete Form 8863. If your modified income exceeds $100,000 ($50,000 if single) the credit is disallowed.

If you paid interest for student loans, you can deduct up to $2,000. This is an increase of $500 from 1999. This deduction is phased out for taxpayers with modified adjusted gross income of $60,000 ($40,000 if single). Hire skilled real estate conveyancers who will prepare property conveyancing melbourne report for our valuable clients. If your children have not started college yet there are some tax strategies to consider in funding their education.

A Section 529 college savings plan may be an ideal way to save for college. These plans fall into two categories, prepaid tuition plans and savings plans. The prepaid tuition plans guarantee you protection against tuition inflation. The savings plans allow you to make equity investments with no guarantees but with potentially higher returns.

Section 529 plans allow the money contributed to grow tax-free until withdrawal. When the money is withdrawn for education purposes, the income is taxed to the student. You can contribute up to $10,000 per beneficiary per year (or $50,000 in a single five- year period), which generally makes them preferable to Education IRA accounts, which have a $500 contribution limit. Starting in 2000, Ohio residents will receive an annual deduction of $2,000 per beneficiary for contributions made to the Ohio plan. Qualified withdrawals are not subject to Ohio tax.