Introduction
Expenses for higher education offer taxpayers many ways to reduce their income taxes. This can provide some relief from the high cost of college, graduate school, and other higher education courses. Careful planning before the expenses are incurred will assure that you receive the full benefit of these complicated tax breaks.
If you discover that you were eligible for a tax break but failed to claim it, you can file an amended tax return for up to three years from the date you filed the original return or two years after the date you paid the tax, whichever is later.
This publication has been updated to include changes made by the Pension Protection Act of 2006. This Act made permanent some of the temporary enhancements of the Economic Growth and Tax Relief Reconciliation Act of 2001. The remaining provisions of the 2001 Act will expire on December 31, 2010 unless additional legislation extends them. For rules that will expire, this fact sheet lists both the current rules and the ones we will revert to after December 31, 2010. If you will be saving or paying for higher education expenses after that date, you may be taking distributions from savings plans and claiming tax breaks under those more stringent rules.
This fact sheet focuses on the tax aspects of the various credits, deductions, and other tax breaks available for higher education expenses. You will need to also weigh other advantages or disadvantages in choosing the tax breaks you will use.
How To Use This Fact Sheet
This fact sheet is intended to help you obtain the greatest tax benefits from expenses for higher education. The following descriptions of the sections in this fact sheet will help you find the information you need.
Read this section for a brief overview of nine different tax breaks that are currently available.
Benefits, Requirements and Limitations of Specific Tax Breaks
Use this section to check all the details about the tax breaks for which you may be eligible. Is there an income limit on who can use the tax break? Do the classes have to be part of a degree program? Are books and other expenses covered?
Separate tables cover each of these topics:
- Tax Breaks: Basic Characteristics
- Whose Expenses Are Eligible?
- What Expenses are Allowable?
- Requirements for Student and Institution
- Type of Education Program Covered
- Additional Restrictions on Claiming Tax Breaks
Many terms used in this fact sheet have very specific definitions. For other terms, the definition varies from one tax break to another. Check this section for definitions and explanations.
Claiming and Combining Tax Breaks
See how using one tax break affects eligibility for others so you can plan to maximize the benefits you get.
Tips on Ways to Make the Most of Tax Breaks
Use these suggestions to help you put this knowledge to work.
