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Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.

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Valued Pioneer
Posts: 4
Registered: ‎08-23-2016
Accepted Solution

Tax Deductibility of Graduate School Tuition

I have been working as a graphic designer/illustrator my entire career, and working as a freelancer since 2001. In 2010 I earned an MFA in illustration to advance my skills and to have a degree to help find teaching positions. At the time I was told by my accountant at the time that I could not deduct any of my expenses for tuition. However I am beginning to question whether or not that advice was valid. Could I have taken a deduction, and if so, is it too late to do so?

Tax Pro
Posts: 5,615
Registered: ‎02-23-2016

Re: Tax Deductibility of Graduate School Tuition

Hi eklektos,

 

Welcome to the H&R Block community.

 

I'm kind of surprised that your accountant would tell you there was no deduction for education.  That was unfortunately some pretty bad advice.  In fact, in 2001 there were 2 tax credits and 1 tax deduction available for education, and a second deduction became available in 2002.  Of course each has its own requirements, so you may not have qualified for one or more of them.

 

At the very least you would have qualified for the Lifetime Learning Credit which in 2001 was Part II of the Form 8863 for the Hope Scholarship Tax Credit.  The LLC can be taken for any college tuition expense leading to a degree, certificate, or other credential.  However, it is 100% non-refundable so if you didn't owe any tax it would not have done anything for you.

 

The deduction that was available in 2001 was the Schedule A deduction for work-related education which is still available today.  You could have taken this deduction if the education was for the improvement of job skills in your line of work but not for a college degree.  The Schedule A deduction is taken in the miscellaneous section of Schedule A.  The down side here is that because your total Schedule A deductions must outweigh your standard deduction amount in order for Schedule A to be beneficial, and because your miscellaneous deductions aren't actually deductible until your miscellaneous section total reaches 2% of your adjusted gross income, this one may not have helped you out much if you did not have a significant amount of other Schedule A deductions.

 

Starting in 2002 you also had the option of the Tuition & Fees deduction directly on the 1040.  This one deducts your tuition expenses directly from your income.  The rules are much like the American Opportunity Credit in that you must have been seeking a degree or certificate and must have been at least a part-time student.

 

You only have 3 years from the original due date of any tax return to file for an additional refund, so you won't get anything out of amending the returns that you're questioning at this point.  If you have education expenses in the future though chances are 95% that there will be a deduction or a tax credit that you can take for your education costs.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Valued Pioneer
Posts: 4
Registered: ‎08-23-2016

Re: Tax Deductibility of Graduate School Tuition

LouisH

 

I'm understandably disappointed but glad to know what what to do if I do any future studies. Thanks for your prompt response.

Tax Pro
Posts: 5,615
Registered: ‎02-23-2016

Re: Tax Deductibility of Graduate School Tuition

Welcome.