Not all school related expenses are considered tax deductible or will qualify for a tax credit. Tuition and fees are eligible for tax credits. You can also deduct the cost of books and necessary equipment. Additionally, the school must be on the approved educational institutions list to qualify.
The decision to return to college can affect many areas of your life. The benefits may result in a better paying job and a higher quality of living. However, it can be difficult to juggle school, work and family, as well as the additional financial stress of school. When you go back to school you will need to determine if you will go full or part time and whether you will continue working full time while you get the degree.
Credits for Undergraduate School
If you are going back to get your associate’s or bachelor’s degree, you qualify for either the American Opportunity Credit or the Lifetime Learning Credit. The American Opportunity Credit took the place of the Hope Credit. It can be used for up to four years, and each family member can claim it individually. The Lifetime Learning Credit can be used for an unlimited number of years. If more than one person in your family claims it, however, you must combine the total of the entire family member into the one credit. The Lifetime Learning Credit can be used if you are enrolled part-time. If you have more than one family member in school, you can claim both credits, but only one credit for each individual.
Credits for Graduate School
The Lifetime Learning Credit is the only credit available to graduate students. This credit can be used for the cost of tuition and fees. The Lifetime Learning Credit allows you to deduct the first 20 percent of these costs up to $10,000. The maximum you can claim each year is $2,000. Graduate students will not qualify for the American Opportunity Credit.
Other Help Paying for School
In addition to the tax credit, a returning student can apply for Pell Grants and federal student loans. If you are working, your job may offer tuition reimbursement for a degree in a related field. Schools may also offer assistantships and scholarships to students that perform well. Attending part-time can make it easier to afford school and to continue to care for yourself and your family.