Many people may qualify for a significant reduction in their tax burden if they qualify for an educational tax break from the IRS. While there are tax benefits available for college and other post-secondary expenses, trying to figure out if and how your qualify for the various benefits can be confusing.

It can be difficult to determine which breaks you are eligible for and what will produce the greatest benefit. When filing your tax return, it is important to know the limitations of each benefit, including exclusions and other restrictions.

The IRS website gives guidance on the do’s and don’ts on how to deduct qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent, as a tuition and fees deduction.

To determine whether your expenses are qualified, refer to IRS Publication 970, Tax Benefits for Education.

The good news is that you do not have to itemize to take this deduction.

You can claim qualified tuition and fees as either:

(1) an adjustment to income, as directed above; or

(2) a Hope or Lifetime Learning credit, or

(3) if applicable, as business expenses.

But be sure to keep the following in mind:

•    You cannot take the tuition and fees deduction on your income tax return if your filing status is married filing separately, or if you are claimed as a dependent on someone else’s return. The deduction is reduced or eliminated if your modified adjusted gross income exceeds certain limits, based on your filing status.

•    You cannot claim the tuition and fees deduction and a Hope or Lifetime Learning credit for the same student. If the educational expenses are also allowable as a business expense, the tuition and fees deduction may be claimed in conjunction with a business expense deduction, but the same expenses cannot be deducted twice.

•    Also, you cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance. The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan.

Read about more last minute tax tips that can save your money.

More Tax Help, IRS News and Tax Relief Tips:

1. Small Business Tax Incentives and Credits in American Recovery and Reinvestment Tax Act of 2009
2. KLOS Tax Tip #58: Tax Break for New Car Purchases - and Tax Relief for Hardworking Americans with IRS Problems
3. We’ve Expanded to Help More Taxpayers Resolve Their IRS Tax Problems!
4. What the IRS May Not Tell You About Payment Plans
5. KLOS Tax Tip #44: Individuals Get a Tax Break - But Get Tax Help if You Owe Back Taxes!

Tags: educational expenses, filing tax returns, IRS help, IRS problem solver, IRS tax problems, lifetime learning credit, Michael Rozbruch, tax attorney, tax benefits, tax benefits for education, tax break, tax breaks, tax deduction, tax expert, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, Tax Tips, tuition deduction

This entry was posted on Thursday, April 2nd, 2009 at 12:52 pm and is filed under Tax news and tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.