Can College Books Be Claimed as a Tax Deduction?

By: Mark Kennan | Reviewed by: Ryan Cockerham, CISI Capital Markets and Corporate Finance | Updated March 06, 2019

Sometimes college books can reduce your tax liability.

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The Internal Revenue Service offers a number of tax benefits for higher education expenses, but college books often won't count as a qualified expense. However, certain tax credits and exclusions do allow you to reduce your tax burden as a result of money you spent on books needed for college.

Tip

Although some school supplies won't be considered qualifying deductions, various tax credits are available to help you offset your educational expenses. These include the American Opportunity Credit and the Lifetime Learning Credit.

Tax Deductions and College Books

For tax year 2017, students could take a tuition and fees deduction, which was worth up to $4,000 of qualifying expenses, including books. But for tax year 2018 and onward, students can no longer take this tax deduction. That being said, students who are still interested in exploring various tax credits and deductions associated with their education can benefit from taking a closer look at the American Opportunity Credit and the Lifetime Learning Credit. Both of these programs allow students to offset some of their educational expenses with annual credits and tax saving opportunities.

Exploring the Lifetime Learning Credit

The Lifetime Learning Credit allows you an annual credit of up to $2,000, calculated as 20 percent of up to $10,000 of qualified higher education expenses. However, the lifetime learning credit comes with the same restriction as the tuition and fees deduction: books qualify only if you are required to purchase the book as a condition of attendance from the school. Otherwise, you can't use the costs in calculating your credit.

Evaluating the American Opportunity Credit

The American Opportunity Credit offers the widest definition of qualified higher education expenses, which includes college textbooks and supplies no matter where you purchase them. For example, if the student needs a textbook and can purchase it either through the school or elsewhere, that cost can apply toward calculating the credit – no matter where the student purchases the book. However, you can only claim the American Opportunity Credit for the first four years of post-secondary education.

Tax Exclusions for Scholarships

If a student receives a scholarship, only the portion used for qualifying expenses is tax-free. If the student is a degree-seeking student, the student can exclude from her taxable income the portion of the scholarship used for not only tuition, but also college books, supplies and equipment. While this isn't technically a tax deduction, it allows a student to avoid including more income than necessary on the tax return. This will, in turn, add a degree of financial flexibility throughout the school year and beyond.

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About the Author

Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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