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Tax deduction for Legal Fees?

Tax question about tuition and fees deduction for higher education?

  • You cannot claim the tuition and fees deduction if any of the following apply: "Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption." No one has been claiming me for the past 2 years. I'm 19, 20 in September and worried about how I'm going to pay for school next year. Am I eligible for this deduction? I make roughly 28k per year and live completely on my own. I might have to take out a loan for next year and am curious if I could claim this deduction at the end of the year to pay for almost all of the loan (I know up to 4k). If not, anyone who has an idea please let me know. I know there's two other tax credits I'm eligible for. Also, can I use the deduction after I graduate when paying some loans back? I've read a bunch of times on the IRS website and other websites but I'm having trouble understanding.

  • Answer:

    Each year stands on it's own. The tuition deduction can only be claimed in the year you pay tuition. (And even then, only if the course is in the current year or the first 3 months of the following year.) The education credits work the same way. Whether the tuition is paid for from cash or savings or a loan doesn't matter. However, let's say that you decide to go back to school full time in 2013. You decide that you cannot pay this out of savings, but will get a loan for both tuition and living expenses. If you stop working completely, then you will hit a snag. if only you pay your bills, you will still be eliglble to claim your own exemption and the deduction and credits on your return, BUT, since you won't have any taxable income, you can't use any of these deductions or credits, because they only lower your tax bill and you won't have any. Than in 2014, you go back to work full time and pay off the student loans. Only the interest on the loans is a deduction in 2014.

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You meet the criteria as per your definition above. If you haven't claimed the credit for the previous two years you can even file amended returns and pick up the money. If you are as clear as mud I urge you to find a registered & licensed tax preparer for a question and answer face to face meeting and take some notes. I have multiple college degrees and 41 years hands on experience and it still makes my head hurt.

From the info you give, you could take the deduction. You'd almost surely do better though with an education credit - American Opportunity if you're eligible, otherwise Lifetime Learning. The amount you can claim for the deduction or credit is limited by your actual eligible out of pocket school expenses and by the rules of the deduction or credit. (Expenses paid with loans count as out of pocket.) The maximum tuition and fees deduction is $4000, and you'd likely be in a 15% bracket so your maximum tax savings would be $600 - one of the credits would likely give you more than the deduction, and you have to choose, can't take both. When you're paying the loans back, you can deduct interest you pay up to a certain limit per year.

1) You may be eligible for it but the American Opportunity Credit or Lifetime Learning Credit are going to be better deals for you. You can not use both a credit and a deduction for the same tuition. Tuition paid with student loans does qualify for either the deduction or the credits. 2) The credits/deductions only apply while you are in school. Paying back student loans does not count as paying tuition. However, the interest that you pay on those student loans is deductible.

since you are not a dependent you file your own tax return, on your own income and claim your own education credits, there is the Lifetime and the American Opportunity Credit you use only one for each student the loan will not allow you the credit, it will be the tuition and expenses you will receive a 1098 form to report

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