Tax Education Deduction
October 4th, 2010
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Question: What kind of tax credit/deduction should i take for education expenses ?
My wife will be graduating from college this spring. She has 20K in debt. She does not work while I work making 70K/year.
Should i try to take advantage of Lifetime tax credit for her ?
I took a Kaplan GMAT (for MBA admissions)class that cost me $1400. Can i deduct that too ?
What advice would you like to give ? Is there any tax advantage of paying off her debt little at a time ?
I appreciate your response.
Answer: Your wife should have received a 1098-T from the college she is attending for all tuituion and fees paid in 2007.
Generally, the Hope Credit/Lifetime Learning Credit is the most advantagous since it reduces your tax liability dollar for dollar, however you could choose to take the Tuition and Fees deduction instead.
Use Form 8863 to take the credit. Fill out this form using the amounts from the 1098-T your wife received.
You can not deduct or claim a credit for the cost of the GMAT test because that is not considered qualifying tuition and fees at an eligible educational institution. See the instructions for Form 8863 for definitions.
As far as paying off her debt, if the 20K is in the form of student loans, the interest paid each year is deductible ($2,500/yr max) on Line 33 of Form 1040 – Student loan interest deduction.
Items on Amazon Right Now for Tax Education Deduction:
It’s not too late to take advantage of college tax credit
This tax credit is part of the American Recovery and Reinvestment Act of 2009 and is available through Dec. 31, 2010. It can be claimed by eligible taxpayers for college expenses paid in 2009 and 2010.
Helping Parents Pay for Education
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