Consolidated: New financial aid policies Harvard and Yale

[anotherNJmom]

<p>nmsd, just got ‘2007 Tax Benefits fro Higher Education’ infomation in today’s mail. it phase out in higher end income.</p>

<p>

Higher Education Tuition and Fees Deduction
Value: The maximum deduction is $4,000 paid for qualified tuition and related expenses, less any non-taxable gift aid (e.g., grants and scholarships), for all eligible students in the family.</p>

<p>Income Limis: Single filers with an Adjusted Goss Income (AGI) between $65,000 and $80,000 joint filers with an AGI between $130,000 and $160,000 are permitted a maximum deduction of $2,000. Filers with incomes exceeding $80,000 ($160,000 joint) are ineligible for the deduction.</p>

<p>Eligiable Education: Any course or courses …</p>

<p>

</p>

<p>So is it possible if one of the spouse raise is $1,500 which push family’s AGI over $160k, after the tax and phase out of ‘Higher Education Tuition and Fees Deduction’ leave family net gain a nagtive number?</p>

[newmassdad]

<p>ANJM,</p>

<p>Yes, if a family were just over the threshhold (i.e. they between $160,001 and $160,200 plus or minus some rounding errors in AGI) and they had a kid in college, they could have a net negative change in income hypothetically.</p>

<p>So what does this show? That it is theoretically possible to find circumstances where the marginal tax rate is over 100%? So what? How many folks fall into this category? More importantly, this is only relevant if one were just under the threshhold last year and just over it now (and had a kid in college both years). In any other case, the family’s rising income exceed the effect of this. </p>

<p>You don’t like it? Talk to your congress person. They set the rules. Personally, I think the phase outs of deductions, along with the AMT as it is currently structured, are unfair hidden taxes. But my opinion does not change the reality. Only congress can do that, and think they have other things on their minds this year.</p>

[anotherNJmom]

<p>

So what does this show?

</p>

<p>

</p>

<h1>548 newmassdad:</h1>

<p>So, to repeat, there is no way phase outs at the national, state and/or local level will rise to the point of a 100% or greater marginal rate.

Well, just show the case of my friend’s brother did exist. :)</p>

[mammall]

<p>High Five, aNJm !</p>

[newmassdad]

<p>ANJM,</p>

<p>You said

But years ago, I heard my friend mentioned her brother, who worked as high tech profesional for a bank. He got raise that year, but his family income hit the boundary of one of tax braket, the increase part subject to a higher tax rate, then there are some tax benefits phase out at that leve of income. So his actual bring home money was less than his previouse year.

</p>

<p>“Years agO” this tax credit did not exist. So try again. </p>

<p>I’ll drop out of this debating society, since a further debate seems rather pointless. Yes, it is remotely possible that some individuals could theoretically have a marginal rate above 100%. And I suspect this is true with the AMT, too, but have not run the numbers. but it does not happen as you seem to have claimed in your post 525. </p>

<p>End of my contribution to this debate. Bye. :)</p>

[bluebayou]

<p>anjm:</p>

<p>Post #555 is absolutely correct, one of factors in progressive taxation. Last year, a good friend (she a 20-year teacher, he an engineer) met with a FinAid officer at a NE LAC and the Officer was quite open in that the only way they could qualify for need-based aid is if she or he quit their jobs.</p>

[SlitheyTove]

<p>Obligatory disclaimer: I’m not an accountant, just an interested amateur. That said…hmmm, surprised that the higher education deduction doesn’t phase out more gently rather than go off a cliff. But the cliff is set by the (modified) AGI, so a clever taxpayer, having gotten a $1500 raise that would put them over the limit for taking the deduction, could do something to drive their AGI down, e.g. bump up their contribution to an employer retirement plan (e.g. 401k) or a health savings account. Still not sure it’s worth it, since it’s just a deduction. Federal top bracket, that’s going to get me back not even $700 taking the full $2k deduction. The raise is still (barely) worth it. Especially since the raise will hopefully still be there four years later, when you’re no longer taking the deduction.</p>

<p>Not that any of this makes any difference, since the Alternative Minimum Tax messes everything up, anyway.</p>