What Education Expenses are Tax Deductible? | H&R Block

August 17, 2017 : Julieann Wood Riley

Editor’s Note: Headed back to college and wondering what school expenses are tax deductible? We’ll tell you here…

College is an expensive endeavor. Luckily, some educational expenses can be used to claim a tax credit or deduction. Know which expenses count and what documentation you need to keep in order to maximize your tax deductions and credits. Read on!

What Are Qualified Education Expenses?

Qualified educational expenses are school expenses like tuition, fees and other related expenses for an eligible student at an eligible institution. They are as follows:

  • Tuition
  • Fees: (like activity fees and other fees charged by the university but application fees are not included in tuition)
  • Course Materials
  • Computers
  • Room and Board*

*Room and Board is not a qualifying education expense for most credits and deductions, it is a qualified education expense for the student loan interest deduction and for students with qualified tuition (529) and Coverdell Education Savings plans. The amount of room and board that is allowed as an education expense is the amount that is determined by the school and is included in the cost of attendance for federal financial aid purposes for any specific academic period OR the actual amount that the student is charged for a student living in student housing owned or operated by the school.

Keep in mind these expenses may be qualified education expenses; however, some credits and deductions include these expenses only if they are required as a condition of enrollment, and in some cases the expenses must be paid directly to the institution.

What About Expenses Paid with Loans?

Yes, any qualifying education expenses paid for with loans will still be qualifying education expenses in the year the expenses are paid even if the money comes from a student loan. If a loan is paid directly to the school, then the payment is treated as paid on the date that the school credits the students account with the payment.

What Expenses Aren’t Qualified Education Expenses?

In general insurance, medical expenses, transportation, and living expenses are not qualified as school expenses that qualify as a tax . Likewise, non-credit courses are not qualified education expenses, unless they are part of a degree program.

Reminder: Keep Documentation

Schools will send the student a Form 1098-T which will reflect tuition and fees and amounts that are billed by the school, and the amounts that the school receives in payment. Taxpayers may also use payment receipts or any other kind of statements showing the payment of qualified education expenses.

Once you understand what expenses will count as a tax credit or deduction, you should keep records of those expense so they can save money later when they file your return.

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Julieann Wood Riley

JulieAnne is a tax research analyst in the Tax Institute. She specializes in the areas of Healthcare and Individual taxation and also focuses on Education Issues. JulieAnne is a graduate of the University of Kansas with a JD.

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