Planning financially for your education is a difficult thing. Even with your GI Bill benefits, and other tuition assistance and support from the military, educational costs will pile up. One of the things that you can do is to remember to deduct some of your education expenses off of your taxes. If you are attending college, or if a member of your family attended college last year you might be eligible to deduct up to $4,000 dollars in education expenses.
The tax benefit of fees and tuition deduction can reduce the amount of income tax that you are subject to by $4000 dollars. You can claim this deduction even if you decide that you don’t have to itemize your deductions. Many people find this deduction helpful because they cannot quality for the Lifetime Learning Credit or the Hope Deduction. You can claim the deduction if you meet these basic qualifications: You pay qualified expenses for education at a institution of higher education, you pay expenses for a eligible student, and the eligible student is your spouse, yourself or a dependent that you claim on your taxes.
You can’t claim the deduction if any of the following applies;
-You are claimed as a deduction on someone else’s tax return (such as your parents),
-You earn more modified adjusted gross income than $80,000 dollars,
-You are filing separately as a married person, or if you are a non-resident alien.
You have to have modified adjusted gross income of not more than $65,000 dollars to qualify for this deduction. The maximum that you can deduct is $4,000 dollars. Fees and tuition costs for paid for fiscal year 2007 are eligible, or the first three months of fiscal year 2008. Expenses for room and board, living or personal expenses, or other family expenses are not eligible.
If you are paying education expenses that qualify with some of the tax-free funds, such as employer tuition aid, Pell grants, the military GI Bill, or military tuition assistance, the amount that you pay with these funds cannot be claimed. For example, if your tuition is $11,000 dollars for a year, and you pay $9,000 dollars with these types of tax-free education funding, the most you can claim is the remaining $2,000 dollars.
Any tuition or qualified expenses that you pay that are not paid by these funds can be claimed, up to the maximum $4,000 dollars. You can use IRS form 8917 and then submit it with Form 1040A or Form 1040 to receive your educational deduction.
