Higher Education Expenses Getting You Down?

DATELINE: NEWTON, MASS...cost of books, room and board, student activity
Rodman & Rodman, P.C., Certified Public Accountantsfees, athletic fees, insurance, transportation costs, or
and Business Strategists, advises taxpayers on howother personal expenses. To qualify, the expense
to determine their eligibility for higher educationmust be in connection with enrollment during the year
expense deductions.for which the deduction is claimed, or in connection
Taxpayers who have just finished grad school or arewith an academic term beginning within the first three
paying their child's college tuition may be able to claimmonths of the following year.
a deduction for the cost of tuition and fees forThe deduction will be "above the line" meaning, it will
enrolling or attending college or graduate school.be taken in arriving at AGI, will therefore be available
Rodman & Rodman has outlined criteria for thoseeven if you don't itemize, and won't be subject to
who are looking to deduct higher education expensesreduction the way itemized deductions are. And, it will
for themselves, their spouse, or their dependents.be allowed for alternative minimum tax (AMT)
For married couples filing jointly: A deduction of up topurposes.
$4,000 annually of qualifying expenses (definedIt's important to note that the higher education
below) may be taken if their adjusted gross incomededuction isn't available for expenses incurred for an
(AGI), with certain modifications, doesn't exceedindividual if the Hope or Lifetime Learning credit is
$130,000 for the year ($65,000 for unmarriedclaimed with respect to that individual for the year. In
taxpayers). If modified AGI is above $130,000addition, amounts received for certain scholarships
($65,000 for unmarrieds) but not above $160,000and other tax-free educational assistance payments
($80,000 for unmarrieds), up to $2,000 of qualifyingare subtracted. Qualifying expenses may also have to
expenses will be deductible. No deduction will bebe reduced when U.S. savings bonds have been used
allowed if modified AGI exceeds $160,000 ($80,000for higher education expenses, and on distributions
for unmarrieds). Married taxpayers must file jointly tofrom qualified tuition programs (also known as 529
claim the credit; it isn't available for married taxpayersplans) or Coverdell education savings accounts (also
filing separately.known as Coverdell ESAs).
For a taxpayer who can be claimed as a dependent:A certified public accountant can help you figure out
The taxpayer who can be claimed as a dependentyour qualifying expenses and if applicable, compare
does not qualify to claim this deduction. In the casetax savings available to you from several different
of a dependent child attending college, the parent'stax benefits to determine which is the best one to
expenses for the child can qualify under these rules,use.
but not any expense the child pays for himself orRodman & Rodman, P.C.
herself. If you're claiming a deduction for expensesFounded in 1961, Rodman & Rodman, P.C. provides
incurred on behalf of another individual, thataccounting, tax and business services to small and
individual's name and social security number must bemedium-sized companies throughout New England.
included on your return.With a focus on strategic planning, Rodman &
What are Qualifying Expenses?Rodman goes beyond traditional accounting services
Expenses that qualify for the higher educationand takes a proactive approach when serving clients
deduction are essentially those for tuition andto increase, preserve and sustain clients' financial net
enrollment or attendance-related fees, but not theworth.