I forgot to mention that, although tuition is going to be a big expense this year, I will be eligible for the Lifetime Learning Credit. In essence, it is a 20% rebate back on your college-level expenses up to $10,000, with some restrictions. Since it is a tax credit and not an deduction, it’s up to $2,000 cash in your pocket.
You must pay these expenses yourself, not from a scholarship or a 529 plan. Tuition counts, and mandatory fees count, but for me books do not, since they are technically not “required for enrollment”. Very disapointing, sometimes the books cost as much as the class!
Also, it is important to note the credit starts to be phased out once your modified adjusted gross income (MAGI) is between $42,000 and $52,000 ($85,000 and $105,000 if you file a joint return), and is gone completely past that. It looks like we’ll slip under that this year, so I guess that’s good (although earning more would be nice too). Unlike the Hope Scholarship Credit, there is no limit to the number of years in which a Lifetime Learning Credit may be claimed. You could do it every year. The best place for more info is the IRS – Tax Benefits for Education.
They really need to cover books if they’re going to cover tuition. I’m surprised colleges don’t just ‘require’ the textbooks and help the students out.
By Jonathan Ping | Taxes | 10/4/05, 11:56pm