The Internal Revenue Service provides several tax credits and deductions for families with dependent children who are attending college. These tax benefits primarily cover educated-related expenses, such as tuition, books, and supplies.
Educational tax benefits don't include room and board meaning the cost of housing and food while attending school. This means that parents cannot use their child’s college apartment or dorm payments as a tax deduction.
Qualified Educational Expenses and Taxes
According to IRS guidelines, qualified educational expenses are expenses that are required to attend the eligible educational institution and are only used for obtaining a degree or certification. Qualified educational expenses include tuition and fees that are required to enroll at or attend the institution. You can also deduct course-related expenses, such as books, supplies, and equipment that the entire class is required to have.
Even though apartment rent or dorm fees are necessary expenses, the IRS does not consider rent as a qualified educational expense because students can use apartments or dorm rooms for their personal use, so you generally cannot write off apartment rent on taxes. Other expenses that cannot be deducted or considered as qualified educational expenses include the student’s living expenses, travel, research, and supplies that are not required for every member of the student’s class.
Although you cannot claim your child’s apartment and dorm rental payments on your tax return, there are educational credits you can claim that can increase your refund or reduce the amount you owe. The IRS currently has three educational credits that you can take if you paid expenses related to your child’s education. These credits include the American Opportunity Credit, the Hope Credit, and the Lifetime Learning Credit. These refundable credits reimburse some qualified tuition and fees you paid for the student to attend college. However, you and your dependent cannot both claim educational expenses during a single tax year. One or the other has to claim the expenses. For you to claim an American Opportunity Credit for your dependent's expenses, you must also claim an exemption for your dependent. The IRS does not allow tax filers to take more than one of these credits for an individual in a single year, so make sure you choose the one that is most beneficial to your tax situation.
Limited Tuition and Fee Deductions
The IRS does allow you to claim tuition and fee deductions if you paid education-related expenses for your qualifying dependent. Claiming this deduction can reduce your taxable income by up to $4,000, but you cannot take this deduction if you claim educational credits like the American Opportunity Credit for the same dependent or your adjusted gross income is above $80,000 for single filers or $160,000 for those married and filing jointly.
You may also be eligible for a student loan interest deduction if you paid interest on your child’s student loan. IRS guidelines require that the student loan is taken out solely to pay for qualified educational expenses. To learn more about educational credits, deductions, and related expenses, please review IRS Publication 970.
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