Hope and lifetime learning credits. Beginning in 2004, the amount of your Hope or lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $42,000 and $52,000 ($85,000 and $105,000 if you file a joint return). You cannot claim a credit if your MAGI is $52,000 or more ($105,000 or more if you file a joint return). This is an increase from the 2003 limits of $41,000 and $51,000 ($83,000 and $103,000 if filing a joint return). For more information, see chapters 2 and 3.

Student loan interest deduction. Beginning with interest due and paid on qualified education loans after December 31, 1997:

See chapter 4 for more information.

Student loan repayment assistance. Beginning in 2004, student loan repayments provided under certain federal and state repayment programs are tax free. See chapter 5 for more information.

Tuition and fees deduction. Beginning in 2004, the amount of qualified education expenses you can take into account in figuring your tuition and fees deduction increases from $3,000 to $4,000 if your modified adjusted gross income (MAGI) is not more than $65,000 ($130,000 if you are married filing jointly). If your MAGI is larger than $65,000 ($130,000), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum tuition and fees deduction is $2,000. No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000). For more information, see chapter 6.

Qualified tuition program (QTP). Beginning in 2004, a distribution from a QTP established and maintained by an eligible educational institution (generally private colleges and universities) can be excluded from income if the amount distributed is less than or equal to the beneficiary's adjusted qualified education expenses. See chapter 8 for more information.

Education savings bond program. . Beginning in 2004, the amount of your interest exclusion will be phased out (gradually reduced) if your filing status is married filing jointly or qualifying widow(er) and your modified adjusted gross income (MAGI) is between $89,750 and $119,750. You cannot take the deduction if your MAGI is $119,750 or more. For 2003, the limits that applied to you were $87,750 and $117,750. For all other filing statuses, your interest exclusion is phased out if your MAGI is between $59,850 and $74,850. You cannot take the deduction if your MAGI is $74,850 or more. For 2003, the limits that applied to you were $58,500 and $73,500. For more information, see chapter 10.

Business deduction for work-related education. Beginning in 2004:

Estimated tax. 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.

Photographs of missing children. 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.

This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Most benefits apply only to higher education.