01 Mar The 5 Best Education-Related Tax Deductions
By Mark T. Berry
Unless you’re taking classes just for fun, furthering your education is a great way to improve your earning potential. So it makes sense that the IRS would help you foot the bill by making some of your educational expenses into tax credits or deductions.
Here are 5 ways the cost of education can reduce your tax bill, whether you yourself are learning new skills or you’re helping put someone else through school.
- Tuition and fees
You may be able to deduct up to $4,000 worth of tuition and fees per year, even if you don’t itemize your deductions on Schedule A.
- Student loan interest
Deducting the interest on qualifying student loans can reduce your taxable income by up to $2,500 per year. Sometimes, this includes the cost of room and board, books, equipment and supplies. We can help you figure out if you meet the income requirements.
- Work-related education for employees
If you have a day job, you may be able deduct education and training that will help you do your job better. These costs must be substantial to be deductible, however, and you must itemize your deductions.
- Professional development for the self-employed
The cost of job-related education directly reduces your taxable income if you’re a small business owner. That means it also reduces your self-employment tax.
- Tax credits for college tuition
The American Opportunity Credit and the Lifetime Learning Credit have slightly different guidelines, but both are designed to help pay for higher education. You can only take one or the other in a given year. We can help you find out which is better for your situation.
Think you might be able to deduct educational expenses on your 2016 tax return? Make an appointment today and we can help you maximize your education-related tax savings.