Tax Benefits for Education

For 2011, the amount of your lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $51,000 and $61,000 ($102,000 and $122,000 if you file a joint return). You cannot claim a credit if your MAGI is $61,000 or more ($122,000 or more if you file a joint return). This is an increase from the 2010 limits of $50,000 and $60,000 ($100,000 and $120,000 if filing a joint return). For more information, see chapter 3, Lifetime Learning Credit.

The amount of your student loan interest deduction for 2011 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $60,000 and $75,000 ($120,000 and $150,000 if you file a joint return). You cannot take a deduction if your MAGI is $75,000 or more ($150,000 or more if you file a joint return). This is an increase from the 2010 limits of $55,000 and $70,000 ($115,000 and $145,000 if filing a joint return). See chapter 4, Student Loan Interest Deduction, for more information.

For 2011, the amount of your interest exclusion will be gradually reduced (phased out) if your filing status is married filing jointly or qualifying widow(er) with a dependent child, and your modified adjusted gross income is between $106,650 and $136,650. You cannot take the deduction if your MAGI is $136,650 or more. For 2010, the limits that applied to you were $105,100 and $135,100.

For all other filing statuses, your interest exclusion for 2011 is phased out if your MAGI is between $71,100 and $86,100. You cannot take the deduction if your MAGI is $86,100 or more. For 2010, the limits that applied to you were $70,100 and $85,100. For more information, see chapter 10, Education Savings Bond Program.

For 2011, if you drive your car to and from school and qualify to deduct transportation expenses, the amount you can deduct for miles driven from January 1, 2011, through June 30, 2011 is 51 cents per mile. The amount you can deduct for miles driven from July 1, 2011, through December 31, 2011 is 55.5 cents per mile. This is up from 50 cents per mile during 2010. See chapter 12, Business Deduction for Work-Related Education, for more information.

The IRS has created a page on IRS.gov for more information about Publication 970, at
www.irs.gov/pub970. Information about any future developments affecting Publication 970 (such as legislation enacted after we release it) will be posted on that page.

For 2011, the Hope credit is not available. However, you may be able to claim an American opportunity or lifetime learning credit. See chapter 2, American Opportunity Credit, and chapter 3, Lifetime Learning Credit, for more information.

If you have taxable income from any of your education benefits and the payer does not withhold enough income tax, you may need to make estimated tax payments. For more information, see Publication 505, Tax Withholding and Estimated Tax.

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.