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<U> IRA's</U>:



<U><P>HOPE Scholarship and Lifetime Learning Credits</U>: HOPE gives you get a maximum credit of $1,500 (100% of the first $1,000 of tuition and fees and 50% of the next $1,000) for school expenses for children, the spouse, or the taxpayer, for the first 2 years of college, if they attend at least half-time. This starts in 1998. The Lifetime Learning Credit gives you a maximum of 20% of up to $5,000 expenses (goes up in 2003) for tuition and fees for eligible students, including instruction to improve or acquire job skills. This starts after June 30, 1998. Both these credits are phased out </P>


<P>For taxpayers with modified AGI between $40,000 and $50,000 ($80,000-$100,000 for joint filers). You can only choose one: either the HOPE, the LLC, or an education IRA during a year. You are required to provide student's name and ID number, and the college will be required to provide information on expenses and on refunds given to you.</P>


<P>&nbsp;<U>Education IRA: </U>Can be used for tuition, books, supplies, equipment, room and board. Contributions are nondeductible and earnings will be nontaxable until distributed (just like present IRA's). You can only contribute $500 per year for each child under 18. The contribution limit is phased out after your modified AGI increases from $95,000 to $110,000 ($150,000-160,000 for joint filers). Distributions from these IRAs are excludable from income to the extent that the amount does not exceed school expenses. If you take out more than the expenses, it is taxable, and there is a 10% penalty. This IRA starts in 1998. </P>

<P>&nbsp;In addition, there is now a deduction for interest paid on education loans, for up to $2,500 interest. This is phased in over 4 years, so the maximum deduction for 1998 is 4 years.</P>

<P>&nbsp;</P>6 but must pay the taxes on them the time of transfer, but you will be exempt from the early withdrawal penalty. If you transfer your IRA's in 1998, income will be spread out over 4 years (1998, 1999, 2000, 2001). Then you must leave the money in for 5 years. </P>