Picking out a college? See if it qualifies.

Picking out a college? See if it qualifies.

campus 2Some people are surprised when little Johnny or Jane’s college or school they picked out ends up NOT being eligible for a tax credit.

Qualified institutions include any college, university, vocational school, or other post secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education.  This includes most accredited public, non-profit, and privately owned for-profit post-secondary institutions.

There is a list you can check and you can also consult with the school.

Expenses that qualify at these qualified schools include:

  • Tuition and fees required for enrollment
  • The expenses for the tax year or the academic period that starts during the tax year or the first 3 months of the next tax year
  • Student activity fees that are required to be paid in order to attend the school  (example: a fee all students have to pay that funds ALL on-campus organizations and activities)
  • books, supplies, and equipment REQUIRED for the course and that are REQUIRED to be purchased DIRECTLY from the school
  • FOR THE AMERICAN OPPORTUNITY CREDIT ONLY: the items do not have to be purchased directly from the school

Expenses that do NOT qualify for the credits:

  • room and board
  • insurance
  • medical expenses including student health fees
  • transportation
  • personal, living, or family expenses

The expenses must be paid for higher education that results in a degree or other recognized education credit.   But for the LIFETIME LEARNING CREDIT the course can be taken just to acquire or improve a student’s job skills.   It still must be at a recognized eligible institution.

What if the student drops a course?  Any amount not refunded is still deductible.

The amount considered paid can be paid from your own funds or from loans.

You will need to have the 1098-T form from the college when you file your taxes.

Education FAQs.

Here’s a handy (if not a little outdated) list to compare the possible education credits/deductions courtesy of the IRS.

Linda Reinhardt

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