Eligible Education

Today TaxMama hears from Dil in the TaxQuips Forum, who needs clarification. “The issue is related to the definition of  ‘qualified educational institution.’  The institution is a regionally accredited one, but the full definition of ‘qualified educational institution’ requires that it be a Title IV institution – one whose students may receive federal financial aid. The education provider in this case is not set up for federal financial aid.

The only tax deduction which qualifies, is the Tuition and Fees above-the-line deduction as other education credits do not qualify or phase out. Also, it cannot be claimed as unreimbursed employee business expense. Please advise.”

Hi Dil,

Very good points. And for the special credits and the tuition and fees deductions related to education, here is the definition:

Eligible educational institution.   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.

Note that it says “eligible to participate” not that it IS participating in those programs. That’s kind of a gray area.

However, when it comes to job-related education or business-related education, qualified educational institution is not defined.

 You will see tax professionals, professionals, managers, sales people, etc. getting education and training from all kinds of companies that do not participate in student aid programs, nor are they eligible. Some organizations are accredited within their professions, for licensing purposes. That’s important to those people whose professions require specific continuing education.

Other organizations providing education have no accreditation at all. For instance, do you really think Tony Robbins and his organization have any special accreditation? 

No. And they cost a fortune.  Yet, I have had audits where the $10,000 or more paid to them by a client was perfectly acceptable.  What he learned helped him increase his sales and his income.

 So, do you have a specific question here, about a specific educational source?

 And remember, you can find answers to all kinds of questions about education benefits, and other tax issues, free. Where? Where else? At  www.TaxMama.com.

5 thoughts on “Eligible Education

  1. Tim Gormley says:

    Thanks, Eva. That’s excellent safety advice. “Safety first” is always true for that occupation.

    On the issue of 1098-T forms, I see some sites that speak of the 1098-T as the determinant of eligibility, yet the IRS Pub 970 mentions acceptable substitutes.

  2. TaxMama says:

    Hi Tim,

    Don’t you love it when places of education are so gutless?
    If the school is accredited by the Accrediting Commission of Career Schools and Colleges, odds are, your expense will survive audit.

    What are you studying?

    Hugs
    Eva

  3. Tim Gormley says:

    I’m to determine if a specific education source is a qualified education institution. It is a vocational school and is accredited according to the database on the Dept of Ed website*. Person at the school says they accept federal student aid but they do not participate in a federal student aid program. The school does not issue 1098-T forms, but I see the IRS states 1098-T not required for “Courses for which no academic credit is offered.” This school grades on class hours, not academic credits. The person at the school could not answer my question about eligibility for tax credits. She recommended talking to a tax person and said that has worked for some people for claiming it on their taxes.
    * It is accredited by the Accrediting Commission of Career Schools and Colleges.

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