Choose the Best Option

Taxpayers have several options for using education expenses to reduce taxes:

• American opportunity credit or lifetime learning credit
• Tuition and fees deduction
• Itemizing on Form 1040, Schedule A (employee-related expenses only)
• Reporting as business expenses on Form 1040, Schedules C and C-EZ

Generally, taxpayers will benefit the most from claiming the education credits. However, you should compute any of the other benefits for which taxpayers are eligible to determine which gives them the lowest tax. Do not claim multiple benefits for the same education expense; use the benefit most advantageous to the taxpayer.

Refer to the Volunteer Resource Guide (Tab 13), References - Highlights of Education Tax Benefits for a comparison chart of some of the tax benefits for education.