What are Qualified Education Expenses?

Qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.

There are slight differences between the American Opportunity Credit and the Lifetime Learning Credit when trying to figure out which expenses can be claimed as qualified expenses.

Qualified education expenses under the American Opportunity Credit are:

• Tuition and student-activity fees are included only if the fees are paid to the institution as a condition of enrollment and attendance.
• Expenses for books, supplies, and equipment needed for a course of study whether they are purchased from the educational institution or not.

Qualified education expenses under the Lifetime Learning Credit are as follows:

• Tuition, student-activity fees, and expenses for course-related books, supplies, and equipment only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

You may have the following questions: 

• Can I deduct the cost of computer as part of school expenses not included on 1098-T?
• Can I count a laptop for a college student as an expense?
• Can I deduct the cost of books for college classes?
• Does room and board qualify as an education expense?
• What does not qualify as a qualified education expense?
• Can I deduct a computer and books under the Lifetime Learning Credit?

Expenses included on statement 1098-T are for expenses paid directly to your educational institution as a condition of enrollment or attendance.

Under the American Opportunity Credit you are allowed to claim expenses for books, supplies, and equipment needed for a course of study whether or not the materials are purchased from the educational institution. Therefore, you would be able to deduct the computer under the American Opportunity Credit.

However, the Lifetime Learning credit only allows deductions for books, supplies, and equipment needed for enrollment and attendance if expenses are paid directly to the financial institution.

For more information on Form 1098-T click Form 1098-T : Tuition Statement

Generally, under the American Opportunity Credit you could count the laptop as an expense as long as the computer was needed for a course of study. Under American Opportunity Credit there is no requirement that equipment must be purchased from the educational institution.

However, the Lifetime Learning Credit only allows you to deduct equipment expenses required by and purchased directly from the educational institution.

Yes, you can deduct the cost of books for college classes under both credits. However, to take the credit under the Lifetime Learning Credit, the books must have been purchased directly from your educational institution.

Under the American Opportunity Credit, you can deduct the cost of books for college whether or not the materials are purchased from the educational institution.

Unfortunately room and board do not qualify as educational expenses even if the amount has to be paid to the institution as a condition of enrollment or attendance.

Here is a list of expenses that do not qualify for education expenses even if they must be paid to the institution as a condition of enrollment or attendance:

• Insurance
• Medical expenses(including student health fees)
• Room and board
• Transportation, or
• Similar personal, living, or family expenses
• Education that involves sports, games or hobbies, or any non-credit course unless it is part of the student’s degree program

You can deduct these items only if the expenses for these items were paid to the institution as a condition of enrollment or attendance.

Don't worry about calculating your qualified education expenses.  TurboTax easily makes these calculations for you.