Even though 2006 tax forms don’t include key lines about tuition and fee deductions, you can still take advantage of them (up to $4,000 in eligible expenses).
When this year’s tax forms were printed, the Tuition and Fees Tax Deduction was still pending. President Bush approved the deduction in December, after forms had already gone to print. So you won’t see a specific line on the 1040 form for tuition and fees, but the IRS has since published instructions for this deduction.
Here’s how you do it:
Enter the amount of tuition and fees to deduct on line 35, “Domestic production activities deduction.” What on earth do “domestic production activities” have to do with college tuition? Not much, but they had to put it someplace. So, just accept that it makes no sense, and remember to add the letter “T” or “B” next to the number you enter here. Enter a “T” to the left of the amount if it includes just tuition and fees. Enter a “B” if that amount also happens to include both tuition AND domestic production activities. We doubt that many of you will enter “B” but for those of you operating a large manufacturing business out of your dorm room, take note.
For more information, track down a copy of the IRS Publication 970, “Tax benefits for Education.” Better yet, consult with a tax advisor.
Just a little advice for those who have not filed their taxes: invest in the $30 cost of Turbo Tax (a computer program that you buy for each tax year). The question of whether you have had any tuition expenses is specifically asked on the turbo tax program...I've used turbo tax for years nows and love how easy it is to maximize deductions b/c it asks questions re: deductions in plain english vs the encripted language of federal tax forms.
What about grad school tuition and fees? Would it matter to my parents' tax returns?
Is this the same thing as the Lifetime Learning Credit?
While you don't need a job to file an income tax return, the system has been designed to ensure that you don't get more out of it than you put into it. When you run down the calculations, your deduction cannot be greater than the sum of the total income taxes paid during the prior year. If you've no significant source of income other than loans and don't have significant amounts of investment or other non-employment income, you've not likely paid much in federal taxes and therefore will not recapture much. Also, if you're claimed on another person's return as a dependent, only that person can claim the deduction. If you do file, though, be sure to take advantage of the phone tax refund if you're eligible. (Had a phone in your name in the past few years? Easy $30!). Happy filing!
Also, don't forget you can amend prior years' taxes (I'm not sure how far back you can go) as well. This may predispose you to an audit, so be sure everything else is in order. And if you happen to have a spouse who also works, your deduction may be less than the hoped-for $4000. :(
I have three questions:
1. Has this been a part of deductions before now?
2. Do you have to have a job to file?
3. Do you obtain a refund?
Yes there is a way that you can do it. You can amend your tax return for your education expenses.
That would have been nice to know BEFORE I filed my taxes...gotta love the system and the way it works huh :)
Is there still a way I can do it now, after the fact? hmmmm...