What Is a Qualified🧸 Higꦫher Education Expense (QHEE)?

A qualified higher education expense (QHEE), as defined by the Internal Revenue Service (IRS), is an expenditure for the costs of hig♔her education that is eligible for a tax credit.

The costs of tuition, books, school fees, and supplies related to enrollment in a college, university, or other post-secondary institution all qualify for credits totaling up to $2,500 a year depending on the parents' modified adjusted gross income.

Room and board costs do not qualify for QHEE credits.

The credit can be claimedꦿ by a student, parent, or anyone else who pays the costs.

Understanding Qualified Hﷺigher Education Expenses (QHEEs)

Tax breaks related to educational costs can be claimed in a number of ways. These include:

• By claiming a tax deduction of up to $2,500 a year in interest paid on student loans, depending on your modified adjusted gross income.
  
• By claiming a QHEE tax credit of up to $2,500 a year on your annual tax returns.
• By making withdrawals from an IRA account before age 59½ without owing the usual 10% early 澳洲幸运5官方开奖结果体彩网:withdrawal penalty.
• By using distributions from a tax-free account such as a 529 Plan or a 澳洲幸运5官方开奖结果体彩网:Roth individual retirement account (IRA) for QHEEs.

These tax breaks can be claimed 🥂during the tax year and for the first three months of the following tax year.

Qualified higher education expenses are any amounts paid to cover the costs of a student at an accredited post-secondary institution. Expenses covered under this category include tuition, books, materials, supplies—including laptops or notebooks—and other related expenses such as student activity fees.

These costs can be paid by cash, check, credit card, or money from a loan. The fees may or may not be paid directly to an el🌼igible post-secondary institu𒐪tion.

Eligible schools include private, public, for-profit, and nonprofit institutions. All schools send out a 澳洲幸运5官方开奖结果体彩网:Form 1098-T—Tuition Statement for QHEEs to the student for tax purposes.

Special Considerations

As noted above, qualified higher education expenses are defined as tuition, fees, books, supplies, and equipment needed to enroll or attend a level of education beyond high school.

These expenses are important because they can determine whether you can exclude the interest on a qualified 澳洲幸运5官方开奖结果体彩网:savings bond from your 澳洲幸运5官方开奖结果体彩网:taxable income. Expenses that do not qualify include insurance, medical expenses, student health fees, transportation, personal living expenses, or fees relating to sports activities.

Taxpayers may claim QHEEs for reimbursement under the 澳洲幸运5官方开奖结果体彩网:American Opportunity Tax Credit (AOTC) or the 澳洲幸运5官方开奖结果体彩网:Lifetime Learning Credit (LLC). The AOTC is capped at $2,500 per student, while the Lifetime Learning Credit is limited to $2,000 per tax return.

The Lifetime Learning Credit is only available to taxpayers with a 澳洲幸运5官方开奖结果体彩网:modified adjusted gross income (MAGI) of $80,000 or less, or $160,000 or less for married couples filing jointly.

Filers can use to apply for both credits. It's important to note, however, that you can’t take more than one type of credit for the same student and the same expenses. So, you can't take the AOTC and the LLC for the same student in the same tax year.

The Bottom Line

Students or their parents can deduct some expenses of higher education and gain t🅘ღax credits for others up to annual limits set by the IRS.

As always ꦍwith the IRS, the rules arဣe complex. A qualified tax professional can help you uncover all of the tax breaks you can use to lighten the burdensome costs of higher education.