FAQ #2: What Are Qualifying Education Expenses?

The competitive job market has driven many to go back to school to join the fleet of post-high schoolers. This fall, an estimated over 20 million students will attend college. To offset some of the growing cost of college, the IRS has made available plenty of tax deductions. But what counts as qualifying education expenses, exactly? Read the list of yes’s and no’s below before filling out your tax return.

Defining Qualifying Education Expenses

An education expense isn’t simply an expense related to your education. For example, with the Lifetime Learning Credit, rules are a bit more restriction. Both the American Opportunity Credit and Lifetime Learning Credit consider tuition and student-activity fees as qualified expenses if they were paid to an eligible education institution as a condition of enrollment. Generally, you can claim books, supplies, and other items required for class under the American Opportunity Credit, but with the Lifetime Learning Credit, you have to buy these supplies directly from the school.

Eligible for Deduction

Make sure you have the exact numbers for the below before claiming anything on your taxes.

  • Tuition and enrollment fees
  • Fees related to requirements for class, such as lab fees
  • Course-related equipment, such as books and supplies
  • You can deduct the expenses listed above for future semesters, as long as it begins in the first three months of the following year.
  • You can deduct the above whether they were purchased with cash, credit, checks, savings, loans, gifts, and/or inheritances.

Ineligible for Deduction

  • Room and board
  • Fees for extracurricular activities, even if they are hosted by the school
  • Insurance
  • Medical expenses
  • Transportation
  • Fees related to licenses (such as a CPA)
  • Tutoring fees
  • Private school fees or uniforms
  • Application fees
  • Daycare or homeschool expenses

Many of the expenses accrued for higher education are deductible. If you aren’t certain or believe you fall under special circumstances, consult a tax professional.


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