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Between my wife and I we have 2 small cd's each worth the same amount. There is enough to pay off my daughters first college loan. I have heard that it is okay to use this money for education without any penalties. I have not sent in my taxes yet. I was going to take the Hope credit for the year 1998. If I can take the money to pay the first year loan, can I still take the Hope credit? If I wait till after April 15 would it make any difference? And if I do this either way can I still take the credit next year??

Thanx in advance for your help,
And what a wonderful website this is!
Jim
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It is my understanding that the time to use the IRA's for 1998 education expenses has passed. Withdrawals from IRA's can be deemed made for qualified expenses only in the year the expenses are incurred. If you took out a loan, repayment of the loan is different than paying for the education. Use the Hope Credit in 1998; withdraw the IRA's in 1999 to pay back the loan to the extent of 1999 education expenses...or, if 1999 is your daughter's second year in college, continue to use the Hope credit and then in 2000 when your only credit option is the less lucrative Lifetime Learning Credit, use the IRAs. Just an observation...and something to think about.
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[[Between my wife and I we have 2 small cd's each worth the same amount.
There is enough to pay off my daughters first college loan. I have heard that it is
okay to use this money for education without any penalties.]]

If they are just certificate of deposits (and NOT in your IRA account) there should be neither taxes or penalties. But if the CDs are in your IRA, then you may avoid penalties, but certainly not taxes. You can read more about this issue in my post in the Tax FAQ area.

[[ I have not sent in my
taxes yet. I was going to take the Hope credit for the year 1998. If I can take
the money to pay the first year loan, can I still take the Hope credit? If I wait till
after April 15 would it make any difference? And if I do this either way can I still
take the credit next year??]]

Sorry...but I'm not sure that I can understand your questions. You might head on over to the Taxes FAQ area and read my various posts about the Hope and Lifetime credits and how they all interact.

TMF Taxes
Roy

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Thank you for your input..............Jim
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