Do I qualify for the education tax credit for 2003?

Q: My 18-year-old is in her freshman year of college. I took out a promissory note with VSAC (VT State) to finance her tuition, but haven't started making payments. Do I qualify for the education tax credit for 2003? I'm due to start making payments this March 04. --Robyn, Woburn

The following answer was provided by Mark Misselbeck, CPA, Levine Katz Nannis & Solomon PC, Needham.

A: You qualify to try to claim either the $ 3,000 tuition tax deduction or the Hope Tax Credit (the Hope is available only for the first two years of college). Both the tuition deduction and the credit are phased out over a range of income. You need to look at the worksheets in the return instructions to calculate if you are able to claim either. It doesn't matter that you haven't begun to pay back the loan - you have put your assets and credit "on the line" to obtain the funds with which to pay for your daughter's education, thereby allowing you to try to claim one of these tax benefits.