How to Use College Tuition as a Tax Deduction
The IRS allows certain deductions to be made when a person pays out of pocket for work-related tuition costs. This is applied as an adjusted gross income for self-employed workers, and as an itemized tax deduction for employees. If you went to school on a loan, you may even be able to deduct the interest of the loan as well.
- Keep all the receipts related to your educational expenses for the year. This means that receipts for your tuition, books, fees and other educational expenses that were incurred while taking the needed courses need to be held onto.
- When doing your taxes, pull out all these receipts and total the values of what it cost you to go to school. Keep in mind that unless the course directly relates to your current employment, it cannot be used as a tax deductible expense. Whatever the total number was that you calculated, write it down on Line 4 of the 2106 Tax form. You can claim the deduction as long as you file a 1040 and a Schedule A along with the 2106 form.
- Use the Schedule C form to deduct any business educational expense on Line 27. You can claim the business deduction along with any others by filing a Schedule C form along with your 1040.
- Use the student loan interest worksheet in your 1040 tax forms to deduct the cost of the interest incurred on your student loans. Claim the allowable amount by writing the total number of interest on Line 33 of the 1040.
- Fill out the 8863 tax form if you would like to claim the Hope credit or the Lifetime Learning credit for dependent students. Enter the credit amount on Line 50 of your 1040 Form. You can only file this for dependent students for up to two years per student.