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Category: Education: Tax Breaks Related to School

What higher education expenses can I use to reduce my taxes?

Generally, the only expenses that qualify are the tuition and the fees that are required for enrollment or attendance at any accredited college, vocational school, or other post-secondary educational institution eligible to participate in the student aid programs administered by the Department of Education.

The American opportunity tax credit can be claimed for expenses for the first four years of post-secondary education.

I have to buy books to pass my classes. Are these expenses deductible?

The term "qualified tuition and related expenses" has been expanded to include expenditures for "course materials." For this purpose, the term "course materials" means books, supplies and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. The student should receive a Form 1098-T, Tuition Statement, from the institution attended.

Does an expenditure for a computer qualify for the American opportunity tax credit?

Whether an expenditure for a computer qualifies for the credit depends on the facts. An expenditure for a computer would qualify for the credit if the computer is needed as a condition of enrollment or attendance at the educational institution.

What expenses are considered "qualified" expenses?

Qualified expenses for all credits include tuition and expenses related to enrolling and attending post-secondary education. The expenses must be paid during the year for the academic period beginning during the tax year or in the first three months of the following year.

The following expenses do not qualify:

  • Room and board
  • Transportation
  • Insurance
  • Medical expenses
  • Student fees except if they are a condition of enrollment or attendance
  • Expenses paid with non-taxable funds or tax-free educational assistance
  • Same expenses used for any other tax deduction, credit or educational benefit.

For information on Education Credits click here
For information on Tax Benefits for Education click here
For information on Reporting Education Expenses click here
For more information, please review Publication 970