Category: Education: Tax Breaks Related to School
Should I report my education expenses as an Education Credit or as a Tuition and Fees Deduction?
Unfortunately, every tax return is different. Therefore, there is not one way that always works best. On some returns, the best benefit comes from using the Tuition and Fees Deduction. On other returns, the best benefit is found by using the expenses to figure an Education Credit. Unfortunately, there is not one way that always works "best".
For a large percentage of returns, though, the best tax benefit comes from using the expenses to figure an Education Credit, as this will help directly reduce the amount of tax that you are accountable for.
|What's the difference between the "credit" and the "deduction"?|
A deduction is used to help reduce the amount of income that the government will be taxing. A deduction comes into play before your tax liability (i.e. the amount of tax that you owe, based on your income) is figured. With deductions, you may or may not see a significant impact on your bottom line.
A credit, however, is used to directly reduce the amount of tax that you are liable for. Once you figure the amount of tax that you are accountable for, you then use credits to help reduce this "bill". Credits directly affect your bottom line.
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