College tax question

[StJess80]

We don't itemize our taxes, because we don't own a home and it doesn't seem necessary. The only credit we get is for Alissa's child care, and we make too much for earned income.

Important info:  I've run across questions in turbo tax asking me about school expenses. DH is completing his BA, w/ 100% tuition remission because I work for the university. I did have to do some searching to see if that was considered taxable income or not. It wasn't for me when I was completing my BA, but I assumed it was because it's my employer. Looks like it is because it's only a bachelors program. I am in graduate school right now (part time). DH is also part time. Books are not covered w/ remission, but he did get a small pell grant because both of us are in school. We are both "married, filing at the higher single rate" w/ 0 deductions on our W2. When we file, we file married filing jointly, with one dependent.

Question(s):
----If his book expenses are higher than the grant he received, is it worth it to claim that expense? Will that throw us into having to complete an itemized return (which I assume costs more to file)?
----My grad program is being paid for with a small scholarship, and student loans. I have not begun to pay those back yet, as I am still in school. Same question, is it worth it to claim my textbook expenses, if they exceed the amount of the scholarship? And does it matter for me since I have taken out student loans?

Yes, I know this is not advice being given to me, and that I should seek a professional tax preparer for official answers. I have taken a look around the IRS website, but got a bit bogged down by all the tax jargon. Any opinions are appreciated! (and any other comment on a potential issue you may see with the info I've provided) Thanks!

[mrsfarmer]

You need to Google if textbooks qualify. I did and on TurboTax under Lifetime Learning Credit:

Calculating your credit
You can include the cost of tuition, fees and any books or supplies you are required to purchase directly from the school if it's a condition of enrollment. Therefore, if your professor recommends that you purchase a textbook even though you can still enroll in the class without one, then you cannot include the cost of the textbook in the credit. As of 2010, the maximum credit you can claim is 20 percent of up to $10,000 in eligible costs or $2,000.

I'm not sure what credit you are trying to qualify for, but Google that tax credit and if textbooks qualify.

[sometimesrunner]

The tuition & fees deduction is not on Schedule A, so it will not impact whether you itemize or take the standard deduction. Here's where you can read more about it: www.irs.gov/publications/p970/ch06.html. If you have the time, I would find the receipts from your books and include them on your return.

[mainelyfoolish]

There are different ways to claim educational expenses on your taxes. Having to take out loans to pay the expenses doesn't matter; you still incurred the expenses.

If you're looking at the Lifetime Learning Credit, it is unlikely that your textbooks count. If you buy them yourself from the school bookstore (i.e. they aren't included in the course tuition), you can't claim them. Also, this is a credit, not an itemized deduction.

You can use educational expenses as an itemized deduction if the education is to further your current career (not train for a new one) but it's a miscellaneous itemized expense which means it's subject to a 2% AGI limitation and if you aren't otherwise itemizing your deductions, this will probably not help you at all.

ETA: Sorry, I'm really out of practice on this topic. There is an American Opportunity credit, Lifetime Learning Credit, Tuition and Fees deduction, and finally the itemized expenses deduction for work related schooling. There are calculators on the IRS website to tell you what, if any, you might qualify for (there are AGI and other limitations for the credits), but bottom line is your textbook expenses are not likely to get you any money back on your tax return. 

[mainelyfoolish]

IRS info on tax benefits for education: www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center

Handy comparison chart: www.eitc.irs.gov/Other-Refundable-Credits/educompchart

[StJess80]

Thanks! I'll take a look in the morning. I don't believe either of us will be affected by college stuff this year, because we haven't paid any interest on mine yet. They are sitting there growing.

I also need to look into the credit about education credit for those furthering their career. I would assume that getting a masters in a field where I have 17 years of experience would be considered furthering my career.