Publication 17
taxmap/pub17/p17-178.htm#en_us_publink1000235857Generally, qualified education expenses are amounts paid in 2010
for tuition and fees required for the student's enrollment or attendance at an
eligible educational institution. It does not matter whether the expenses were
paid in cash, by check, by credit or debit card, or with borrowed funds.
Only certain expenses for course-related books, supplies, and equipment qualify.
- American opportunity credit: Qualified education expenses
include amounts spent on books, supplies, and equipment needed for a course of
study, whether or not the materials are purchased from the educational
institution as a condition of enrollment or attendance.
- Lifetime learning credit: Qualified education expenses include
only
amounts for books, supplies, and equipment required to be paid to the
institution as a condition of enrollment or attendance.
Qualified education expenses
do not include amounts paid for:
- Room and board, insurance, medical expenses (including student
health fees), transportation, or other similar personal, living, or family
expenses.
- Any course or other education involving sports, games, or
hobbies, or any noncredit course, unless such course or other education is part
of the student's degree program or (for the lifetime learning credit only) helps
the student acquire or improve job skills.
- Nonacademic fees, such as student activity fees, athletic
fees, insurance expenses, or other expenses unrelated to the academic course of
instruction.
You can claim an education credit for qualified education expenses
paid with the proceeds of a loan. Use the expenses to figure the credit for the
year in which the expenses are paid, not the year in which the loan is repaid.
Treat loan payments sent directly to the educational institution as paid on the
date the institution credits the student's account.
taxmap/pub17/p17-178.htm#en_us_publink1000236032You can claim an education credit for qualified education expenses
not refunded when a student withdraws.
taxmap/pub17/p17-178.htm#en_us_publink1000236009 You cannot do any of the following.
- Deduct higher education expenses on your income tax return
(as, for example, a business expense) and also claim an education credit based
on those same expenses.
- Claim more than 1 education credit based on the same qualified
education expenses.
- Claim an education credit based on the same expenses used
to figure the tax-free portion of a distribution from a Coverdell education
savings account (ESA) or qualified tuition program (QTP).
- Claim an education credit based on qualified education expenses
paid with educational assistance, such as a tax-free scholarship, grant, or
employer-provided educational assistance. See
Adjustments to Qualified Education Expenses, next.
 | At the time this publication went to print, Congress was
considering legislation that would extend the tuition and fees deduction. If
this deduction is in effect, you cannot claim an education credit in the same
year you claim a tuition and fees deduction for the same student. To find out if
this legislation was enacted, and for more details, go to
www.irs.gov/formspubs. Also see Publication 970. |
taxmap/pub17/p17-178.htm#en_us_publink1000236049If you pay qualified education expenses with certain tax-free
funds, you cannot claim an education credit for those amounts. You must reduce
the qualified education expenses by the amount of any tax-free educational
assistance and refund(s) you received.
taxmap/pub17/p17-178.htm#en_us_publink1000236033This includes:
- Tax-free parts of scholarships and fellowships (see
chapter 12 of this publication and chapter 1 of Publication 970),
- Pell grants (see chapter 1 of Publication 970),
- Employer-provided educational assistance (see chapter 11 of
Publication 970),
- Veterans' educational assistance (see chapter 1 of Publication
970), and
- Any other nontaxable (tax-free) payments (other than gifts
or inheritances) received as educational assistance.
Qualified education expenses do not include expenses for which
you, or someone else who paid qualified education expenses on behalf of a
student, receive a refund. For more information, see
Refunds in chapters 2 and 3 of Publication 970.
taxmap/pub17/p17-178.htm#en_us_publink1000236036Do not reduce qualified education expenses by amounts paid with
funds the student receives as:
- Payment for services, such as wages,
- A loan,
- A gift,
- An inheritance, or
- A withdrawal from the student's personal savings.
Do not reduce the qualified education expenses by any scholarship
or fellowship reported as income on the student's tax return in the following
situations.
- The use of the money is restricted to costs of attendance
(such as room and board) other than qualified education expenses.
- The use of the money is not restricted and is used to pay
education expenses that are not qualified (such as room and board).
For examples, see chapter 2 in Publication 970.
Previous Page |
Table of Contents |
Index |
Next Page
