J.K. Lasser's 1001 Deductions and Tax Breaks 2013: Your Complete Guide to Everything Deductible

CHAPTER 3

Education Costs

Alert

At the time this book was printed, Congress had not extended numerous breaks for 2012 that had expired at the end of 2011. Check the online supplement in February 2013 at www.jklasser.com or www.barbaraweltman.com to see whether these breaks apply for 2012 returns.

No one doubts the importance of education—for ourselves, our children, and our grandchildren—but obtaining it can be pricey. According to the College Board, the average cost of 1 year in a public university is over $21,500 and for a private college today is over $44,000 (most of the top schools cost is now approaching $60,000 annually), and the cost of higher education is increasing at more than 4% annually (compared with an overall inflation rate of about 3%). Fortunately, the tax law provides many incentives to help you save for education and to pay for it on a tax-advantaged basis.

This chapter explains education-related tax benefits, including:

• Employer-paid courses
• Scholarships, fellowships, and grants
• American Opportunity credit
• Lifetime learning credit
• Job-related education
• Tuition and fees deduction
• Student loan interest
• Interest on U.S. savings bonds
• Coverdell education savings accounts (ESAs)
• Qualified tuition programs (529 plans)
• Seminars
• Educational travel
• Cancellation of a student loan
• Penalty-free withdrawals from IRAs
• Government reimbursement

For more information, see IRS Publication 970, Tax Benefits for Education.

Employer-Paid Courses

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