Today TaxMama hears from Linda in Kentucky with a reasonable question. “My son-in-law had on-line college classes that required him to have internet services and a computer. Do these count towards the tax credits? Also, how would he go about getting the books, supplies, gas, etc. credited?”
In a very odd and inconsistent twist, when Congress wrote the American Recovery and Reinvestment Act of 2009, they added computers and Internet access to the approved expenses for Code Section 529 education plans. Those are the Qualified Tuition Programs that allow you to put away 5 years worth of contributions in one chunk to grow tax-free until college. In 2009, the contribution limit was $65,000.
Here’s the twist. You could use the Sec 529 money for computers and Internet. But read this:
In general, expenses for computer technology are not qualified expenses for the American opportunity credit, Hope credit, lifetime learning credit or tuition and fees deduction.
Bizarre, isn’t it? Why would they make it OK for one benefit and not the others? After all, how could you possibly go through college today without a computer and Internet access? I can’t even begin to imagine!
As to the rest of the expenses, which now includes books, even if you don’t buy them directly from the college, use Form 8863 to claim his credits. https://www.irs.gov/pub/irs-pdf/f8863.pdf
You will find the instructions here – https://www.irs.gov/pub/irs-pdf/i8863.pdf . The instructions include a chart outlining the kinds of expenses you can use.
Use Form 8917 to claim the expenses instead of the credits. Instructions are included with this form.
As to the gasoline, or mileage? Unless these were job related classes…forget it. But, if the classes were job-related, you have one more option. Once you’ve used up the expense limits for the Education Credits, or the education expenses, you can use the leftover costs on Form 2106 – Employee Business Expenses. That gets more complicated. Read about that here. https://www.irs.gov/taxtopics/tc514.html
And remember, you can find answers to all kinds of questions about education expenses and other tax issues, free. Where? Where else? At TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS Publication 970 :: Tax Benefits for Education
- IRS Articles :: Special IRS Web Section Highlights Back-to-School Tax Breaks
- IRS Form 8863 :: Education Tax Credits under ARRA
- Instructions to IRS Form 8863 ::
- IRS Form 8917 :: Tuition and Fees Expenses
- IRS Tax Topic 514 :: Employee Business Expenses