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Planning for your child’s college education can be a daunting task. The cost of tuition at public and private colleges keeps increasing every year. If you don’t start saving now, you may not be able to afford the college of their choice later on.

There are two types of college savings accounts available to you. Both of them come with certain tax advantages: 529 Plans (also known as Qualified Tuition Programs) and Coverdell Education Savings Accounts (previously known as Education IRAs).

529 Plan

How it Works

529 Plans are named after the section number of the IRS code in which they are described. Each state has its own version of a 529 plan. Depending on the state you reside in, you will have either or both of these options:

1. 529 Prepaid Tuition Plan. You prepay future tuition at today’s rates. This type of 529 plan is guaranteed to increase in value at the same rate as college tuition.

2. 529 College Savings Plan. Contribute to an investment account to save money for future education expenses. You won’t have to pay any taxes on the earnings in your account and qualified withdrawals are tax-free. In addition, qualified education expenses don’t just include tuition but also room and board, books, supplies, and any equipment needed for school.

Note: You can’t deduct prepayments or contributions to a 529 Plan on your tax return.

Contribution Limits

There are no income restrictions on who can participate in 529 plans. However, the amount you can contribute to a plan cannot be more than is necessary to pay for qualified education expenses. The exact contribution limits vary by state.

Coverdell Education Savings Account

How it Works

Coverdell Education Savings Accounts, or Coverdell ESAs, are similar to 529 College Savings Plans. You won’t have to pay taxes on your earnings (i.e. interest, dividends, capital gains, etc.) now or later when you withdraw the money to pay for your child’s qualified education expenses. Qualified education expenses include not only tuition but also room and board, books, supplies, and equipment needed for school.

Note: The contributions to a Coverdell ESA are not tax-deductible.

Contribution Limits

In order to contribute to a Coverdell ESA, your modified adjusted gross income (MAGI) must be less than $110,000 ($220,000 if filing a joint return). For most taxpayers, MAGI is the same as adjusted gross income reported on their federal income tax return.

In addition, total contributions to a Coverdell ESA cannot exceed $2,000 per beneficiary per year (as of 2009). The beneficiary is the child that the ESA was set up for.

Photo Credit: koyochi

Regardless of whether you are already in school or you are planning to go to school, it’s important that you are aware of the various tax deductions and credits that are available to lower your cost of attendance.

1. WHY EDUCATION TAX DEDUCTIONS AND CREDITS MATTER

It always surprises me that so many people go to college or graduate school without really considering education tax deductions and credits. Sure, you can have a tax specialist or software take care of it for you when you file your tax return the next year, but there are good reasons to know about the tax implications of your enrollment in advance.

When it comes to deciding what school to go to or whether to go to school at all, the cost of education usually plays an important role. Two different types of costs come into play.

The most immediate cost you need to consider is the fact that you actually lose money by not working full-time. That could be tens of thousands dollar a year. In finance jargon, it’s called an opportunity cost. More often than not, however, your education will pay for itself as it will allow you to earn more money in the future, especially if you’re just getting a bachelor’s degree.

Assuming you have decided you want to go to school, your next decision rests on which school you should attend. Many of us try to factor in the cost of attendance as much as the quality of education the school can offer. You need to decide which school is the best value. The single greatest direct expense of a college education is tuition and fees. In addition, if you don’t have the funds to pay for it out-of-pocket, you also need to consider how much it’s going to cost you to take out loans to finance your education. The cost of a loan is the interest you pay on it. That is why it’s important to take into account tax deductions and credits which in effect reduce the cost of tuition and fees as well as loans. The after-tax cost of an education is different from its before-tax cost. When you don’t take taxes into consideration, you may jump to wrong conclusions about the relative costs of different schools as well as the cost of education itself. Unfortunately, many people don’t know enough about tax deductions and credits and therefore don’t even bother taking them into account. Don’t make the same mistake. It’s important that you learn about these things in order to make an informed decision.

2. EDUCATION TAX CREDITS vs. EDUCATION TAX DEDUCTIONS

There are both tax credits and tax deductions available to reduce the cost of education for you. In some instances, you will have to choose or the other because you can’t get different tax credits and deductions for the same educational expenses. You should choose the tax credit or deduction that gives you the most money back.

A tax credit will reduce your tax debt dollar for dollar. For example, a $1000 tax credit means you can pay $1000 less in taxes. To find the value of a tax deduction, on the other hand, you need to multiply it by your marginal tax rate. If your marginal tax rate is 30%, then a $1000 tax deduction means you will pay $300 less in taxes. (Note: Strictly speaking, these calculations work only for refundable tax credits and above-the-line tax deductions, but all education tax credits and deductions fall under these categories. If you want to learn about the difference between tax deductions and tax credits in greater detail, you may want to read our Basic Guide to Income Tax).

Another thing you need to be aware of is that you can get tax credits and deductions for qualified educational expenses only. The definition of ‘qualified educational expenses’ varies a little bit depending on the type of credit or deduction. Generally, though, tuition and books are qualified educational expenses while transportation, room and board, health insurance are not.

All four education tax credits and deductions have income restrictions based on your modified adjusted gross income (MAGI). MAGI is the same as adjusted gross income unless you also claimed the foreign earned income exclusion, the foreign housing exclusion, the foreign housing deduction, the income exclusion for residents of American Samoa, or the income exclusion for residents of Puerto Rico on your tax return, all of which would then have to be added back.

3. EDUCATION TAX CREDITS

Two different education tax credits are available: the Hope Credit and the Lifetime Learning Credit. You can only claim one of the two credits. You will have to determine which one saves you more money. Both credits are non-refundable, meaning they will help you reduce the amount of tax you owe but can’t be used to increase your tax refund.

Hope Credit

Here are some facts about the Hope Credit for tax year 2008:

• Amount. The amount of the Hope credit (per eligible student) is the sum of: 100% of the first $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified education expenses you paid for the eligible student, and 50% of the next $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified education expenses you paid for that student.
• Maximum benefit. The maximum credit you can claim is $1,800 ($3,600 if a student in a Midwestern disaster area) per eligible student
• Time limit. Available ONLY until the first 2 years of post-secondary education are completed and available ONLY for 2 years per eligible student.
• Student qualifications. Student must be pursuing an undergraduate degree or other recognized education credential and must be enrolled at least half time for at least one academic period beginning during the year. In addition, there must be no felony drug conviction on student’s record.
• Phaseout. The amount of your Hope credit for 2008 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $48,000 and $58,000 ($96,000 and $116,000 if you file a joint return). You cannot claim a credit if your MAGI is $58,000 or more ($116,000 or more if you file a joint return).

You cannot claim the Hope Credit if you claim either the Lifetime Learning Credit or the Tuition and Fees Deduction.

Lifetime Learning Credit

Here are some facts about the Lifetime Learning Credit for tax year 2008:

• Amount. The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students.
• Maximum benefit. The maximum amount you can claim for the year is $2,000 ($4,000 if a student in a Midwestern disaster area) per return
• Time limit. Available for all years of postsecondary education and for courses to acquire or improve job skills. Available for an unlimited number of years
• Student qualifications. Student does not need to be pursuing a degree or other recognized education credential. Available for one or more courses. Felony drug conviction rule does not apply
• Phaseout. The amount of your lifetime learning credit for 2008 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $48,000 and $58,000 ($96,000 and $116,000 if you file a joint return). You cannot claim a credit if your MAGI is $58,000 or more ($116,000 or more if you file a joint return).

You cannot claim the Lifetime Learning Credit if you claim either the Hope Credit or the Tuition and Fees Deduction.

4. EDUCATION TAX DEDUCTIONS

Tuition and Fees Deduction

Here are some facts about the Tuition and Fees Deduction for tax year 2008:

• Type of deduction. The Student Loan Interest Deduction is an adjustment.
• Amount. You can deduct tuition and fees up to the maximum allowed and subject to the phaseout restrictions (see below).
• Maximum benefit. You can reduce your income subject to tax by up to $4,000.
• Qualified expenses. Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board.
• Student qualifications. The expenses must be paid for a student enrolled in an eligible educational institution who is either you, your spouse, or your dependent for whom you claim an exemption.
• Phaseout. If your modified adjusted gross income (MAGI) is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. 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 deduction is $2,000. No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000).

You cannot claim the Tuition and Fees Deduction if you claim either the Hope Credit or the Lifetime Learning Credit.

Student Loan Interest Deduction

Here are some facts about the Student Loan Interest Deduction for tax year 2008:

• Type of deduction. The Student Loan Interest Deduction is an adjustment.
• Amount. Your student loan interest deduction for 2008 is generally the smaller of: $2,500 or the interest you paid.
• Maximum benefit. You can reduce your income subject to tax by up to $2,500.
• Loan qualifications. Your student loan must have been taken out solely to pay qualified education expenses, and cannot be from a related person or made under a qualified employer plan.
• Student qualifications. The student must be you, your spouse, or your dependent, and enrolled at least half-time in a degree program.
• Time limit on deduction. You can deduct interest paid during the remaining period of your student loan.
• Phaseout. The amount of your deduction depends on your income level. If you are married and file a joint return, the amount of your student loan interest deduction for 2008 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $115,000 and $145,000. You cannot take a deduction if your MAGI is $145,000 or more.

Note that you can still claim the Student Loan Interest Deduction even if you also claim the Tuition and Fees Deduction, the Hope Credit or the Lifetime Learning Credit because the Student Loan Interest Deduction is claimed for an expense not covered by the other three.

Photo Credit: VirtualSugar

Colleges across the country and abroad are making their courses available online. You can download lecture notes, watch videos online, or download audio podcasts to your computer or MP3 player.

OpenCourseWare

The move towards OpenCourseWare(OCW) started with MIT back in 2002 and has since expanded to include universities from all over the world.

There is now an international OCW Consortium. Here are some of the more prominent members.

• Massachusetts Institute of Technology
• Johns Hopkins Bloomberg School of Public Health
• Carnegie Mellon
• University of California, Irvine
• University of Michigan
• University of Notre Dame
• Tufts University
• UC Berkeley

You can access the full list here.

iTunes University

In addition to OCW, there is also iTunes U , which allows you to download podcasts of course lectures to your MP3 player. Imagine that. Here’s just a small selection of universities participating in this program.

• Stanford (iTunes)
• New York Law School (iTunes)
• Duke (iTunes)
• Vanderbilt (iTunes)
• Carnegie Mellon University (iTunes)
• Oxford University (iTunes)
• Cambridge University (iTunes)
• MIT (iTunes)
• Texas A&M (iTunes)

College Websites

Finally, some colleges also host their own webcasts .

• UC San Diego
• McGill University
• Harvard Medical School
• UC Berkeley Webcasts
• Open Yale Courses

Photo Credit: Anna Maikowska

Get $200 from Chase when you open a free business checking account. Just print the coupon and take it with you to your local Chase branch to open your account. There’s also an option to open your account online or over the phone. Link

If you have a Chase bank account, consider enrolling your card in their Debit Rewards Program. For a limited time, Chase is giving away $10 gift cards.

Enrolling your card in the program is free by the way. The more you use your Chase debit card, the more rewards you earn.

Link to Offer

** Deal Over **

“Enroll now and receive enough bonus points
to get a $10 GIFT CARD.1
EARN 1 POINT FOR EVERY $1 YOU SPEND
on qualifying purchases.2
CHOOSE FROM HUNDREDS OF REWARDS
You can redeem your points for cash awards, gift cards and more.
YOU MAY HAVE ALREADY EARNED POINTS
on every qualifying purchase made since January 1, 2009.
Don’t miss out on your $10 gift card. Enroll in Chase Visa Extras by
February 28, 2009 – it’s FREE.”

Not to be outdone by Bank of America, Chase is also offering a bonus for new checking account customers.

Oddly enough, it’s a $100 offer when I open the page in Firefox but a $50 offer when I open it in Explorer.

Link to Offer

Offer:
“We’ll send you a $100 cash bonus coupon to use when you open your account. Just open your account at any Chase branch or online by January 15, 2009.”

** Deal Over **

 Here’s a chance to make some extra money on the side. Participate in the Yahoo User Research program and you can make $100 or more per study. The only downside is that registering for the program does not guarantee that you will be invited to participate.

There are a number of ways in which you can participate in Yahoo Research:

From the Yahoo User Research Promo Page.

“Help us shape the future of Yahoo! by joining our User Research program. Participants may receive $100 or more, depending on the type of research! Signing up takes only a few minutes.” …

“Entry into the Participant Database does not guarantee participation in our research studies. When we plan for upcoming studies, we will query our database for potential participants. If you fit our criteria, we will give you a call or send an e-mail to schedule a time for you to come in to meet with us (or, for field studies, a time to come visit you).”

I think this has happened to us all. At one point or another, you must have come up with some interesting business idea but decided not to pursue it further because of all the effort involved in starting a business. Well, CafePress makes the work easy for you. You just provide the idea and they’ll do all the gruntwork and share their revenues with you.

With CafePress, you can sell apparel, housewares, CDs and DVDs, books, hats, bags, and many more products. You provide the design/content and CafePress will sell it for you.

CafePress sets a minimum price at which you can sell your goods. This base price is necessary in order for CafePress to cover their production costs and make some level of profit. You then set your own retail price over the CafePress.com base price. When CafePress sells your goods, the difference between the retail price and the CafePress base price is yours to keep and represents your profits.

About a year ago, YouTube started a revenue-sharing program with its top content producers. MetaCafe followed suit soon after. Sharing revenue with talented video producers who draw thousands, if not millions, of visitors to their sites makes financial sense. By offering to share revenue, those producers will also have an incentive to keep posting quality content.

The only gripe I have with both YouTube and MetaCafe is that they’re limiting their revenue sharing to their top members. Enter Revver.com, a relatively new video sharing site that offers to share ad revenues with all of its members.

Revver ad revenues are split three-way:
i.) Revver gets a 40% cut.
ii.) The creator of the video gets 40%
iii.) The sharer (i.e. the person who shares the video) gets 20%.

You can be both a creator and a sharer at the same time.

If you want to read more about Revver, here are a couple of news stories:
Revver in USA Today
Revver in Red Herring

Here’s an excerpt from the Revver FAQ section on how to make money:

Revver FAQ Excerpt

How do I make money?

Revver is all about empowering makers and sharers of video by providing easy tools for distribution and sharing revenue with our members.

When you upload your video to Revver, we attach an advertisement and our unique tracking technology to it. We call this “Revverizing.” There are two ways that your video and the associated ad can generate revenue: from impressions/views of the ad (CPM ads), and from clicks on the ad (CPC ads). When a viewer sees a CPM ad associated with your video, you get paid, no click required. When a viewer clicks on a CPC ad associated with your video, you get paid. In both cases, Revver splits the revenue with you 50/50. Please note that not every impression or click will result in revenue, as some advertisers only buy traffic from the US and Canada, and also multiple repeated impressions or clicks from a single user on a single video are scrubbed as duplicates.

You can track video’s performance through your Revver account, which tells you exactly how many times your video is watched, and how much money you’re earning.

Since ads are attached to the video itself, there’s no restriction on how your videos are distributed. The more people email your video, post it to other websites or download it from P2P networks, the more money you could earn.

To increase the value of the entire Revver network, we also reward people for sharing videos. You can earn 20% of ad revenue for sharing videos by other Revver members. The remaining revenue is split 50/50 between the maker and Revver.

How much money can I make?

The exact amount of money you earn per view or click is variable. We are constantly working to improve the value of our network so we can negotiate better rates. So keep uploading and sharing - it’s good for everyone!

Revver - Additional Details

Visit the Revver site for additional details.

Link to Revver Making Money FAQ

Google is hiring representatives for their Local Business Referrals (LBR) program.

As a participant in the program, you’re expected to visit businesses, provide them with information about Google products and collect general information about them like store hours and types of products offered. Oh, you also have to take pictures of the business. You get $10 for each approved report you submit. For more details, please view the FAQs on the Google LBR homepage.

If that sounds like a lot of things to do for 10 bucks, it is. But then again, if you’re desperate enough for money and don’t have another job, it is easy money. You’ll probably want to pick businesses that are located nearby and visit as many as possible on the same day. For example, you could pick a dozen businesses in the same shopping plaza or strip mall. It may take you several hours to the job but at the end of the day, you’re walking away with more than $100 in earnings. You could do this once every week. Of course, it’s just a question of time until you run out of nearby business to prospect. The earlier you jump on board, the more you can earn.

PayPerPost is paying bloggers to post articles about their advertisers. You get a bonus of $20 just for your first post! Payments are made through PayPal.

PayPerPost

Search through a list of Opportunities, make a blog posting, get your content approved, and get paid. It’s that simple. You can easily make $500 a month or more! Sign up now and we will give you your first $20! *Once you are approved for Marketplace Opps look for the Opportunity title “I signed up for PayPerPost.” We are happy to be your first advertiser.

Zinio Review

Zinio allows people to access their favorite magazines online.

Zinio is a subscription service that you usually have to pay for. For a limited time, though, Zinio is giving iPhone and iPod Touch users free access to their special Mobile Newstand service. All they have to do is visit zinio.com/iphone on their Safari browser. No registration is needed. You would imagine that at some point, Zinio will want to start charging these users for the service but so far they have not said if and when they would do so.

The selection in Zinio’s Mobile Newstand service is more limited than the regular service but it’s free, so there’s no point in complaining. Available titles include: U.S. News & World Report, Playboy, Saveur, Popular Photography, Men’s Health, Kiplinger’s, Popular Mechanics, Penthouse, Viv, Car and Driver, PC Magazine, Elle, Technology Review, Outside, Macworld UK, Esquire UK, NME, Macworld Español, Lonely Planet, and Reader’s Digest.

How to Access Free Magazines From Any PC or Mac With Zinio

Here’s the deal though. The free service is technically not limited to iPhone and iPod Touch users but to users who use Safari with iPhone or iPod Touch identification settings. You could just download the Safari browser, if you don’t already have it, and change the settings to indicate to websites that you’re using an iPhone or iPod Touch.

Here’s a step-by-step description of how this would work:

1. Download and install Safari from Apple.com

2. Open Safari.

3. Go to “Edit” -> “Preferences” -> “Advanced” and check “Show Develop menu in menu bar”.

4. Go to “Develop” -> “User Agent” and select “Mobile Safari 1.1.3 - iPhone”.

5. Visit zinio.com/iphone and enjoy.

If you need quick cash but you don’t have the time to commit to a part-time job, donating blood plasma is one option.

To be eligible to donate plasma, you generally have to meet these guidelines:
- be at least 17 years old
- weigh over 110 pounds
- be in general good health

The actual amount of compensation may vary but it is usually around $35 for each donation. You may donate your plasma a maximum of two times per week.

To find a plasma collection center near you, all you have to do is check the yellow pages. In fact, you can do that right online.

Be prepared to spend a couple of hours at the center. You will first be asked to complete a form about your health and lifestyle. For example, your plasma is obviously not going to be acceptable if you indicate that you’re a drug addict or have some infectious disease. The same is true if you got piercings or tatoos over the last year. If you pass the initial screening, you’ll undergo a basic physical exam, which may include taking your blood pressure, your pulse, a blood sample, and your temperature. Only then will you be allowed to donate your plasma.

Participating in a focus group is an easy way to earn some extra income. And it can be quite rewarding.

Focus groups usually last at least a couple of hours and most of them pay upwards of $100 for your time.

Finding a focus group to join can be hit or miss depending on where you live. Your best bet is to check Craigslist.com. Search for “focus group” under “Jobs” and/or “Community”. If you live in a major metropolitan area (e.g. New York, Los Angeles, San Francisco), you’re almost guaranteed to find multiple focus group listings at any given time. (If you live in the boonies, don’t even bother looking.)

Other than finding focus group opportunities through Craigslist, you might also consider contacting market research firms directly. Most focus groups are run by local companies. You can pick up your local Yellow Pages and look for market research firms in your area. Give them a call and ask if they are looking for focus group participants. Even if they’re not running any focus groups currently, they may keep your name on file and contact you later when they do need you.

Focus Pointe Global is one of the few companies that have locations nationwide.

Get a free $5 Kohl’s gift card plus 10% off your next Kohl’s purchase just for signing up for the free Kohl’s email newsletter. All they ask for is your email address. That’s it.

Note that there’s minimum purchase required to use either the gift card or the 10% off coupon.

Link to Offer

Edit: Deal Over

Sign-up for our Sale Alerts today, and we’ll send you an e-mail that’ll save you $5 off your next in-store purchase and 10% off your next Kohls.com purchase! Plus you’ll receive e-mail updates about our biggest sales, exclusive free shipping offers, promo codes valid for online orders and clearance updates!

* There’s no obligation and no hassle: Every e-mail we send you will include an easy opt-out feature to remove your name from our e-mail list. We do not sell or rent the information you provide us.