Question about tax deductions

[Colba55o]

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Has anyone been taking a deduction for their med school tuition on their federal income taxes? I would assume that you could but I'm not sure if thats true.
Also what if you are using loan money to pay the tuition? Can you take tuition deductions only if you are paying out of your own pocket? (which in a way you are since you have to pay the loan money back) THANKS

 

[mpp]

It's better than a deduction, it's a credit. You can take the lifetime learning tax credit for tuition paid in medical school. See IRS Publication 970 for more information.

 

[edmadison]

Has anyone been taking a deduction for their med school tuition on their federal income taxes? I would assume that you could but I'm not sure if thats true.
Also what if you are using loan money to pay the tuition? Can you take tuition deductions only if you are paying out of your own pocket? (which in a way you are since you have to pay the loan money back) THANKS

MPP is right, you get a limitted tax "credit" for the LLC. This is actually and above the line deduction, but the distinction is really not important. The downside is that you can only use a small proportion of your medical school tutition for the LLC. Don't forget though that you can deduct any student loan interest that you paid, including interest that was capitalized. I believe that this is also an above the line deduction.

Ed

 

[edmadison]

I'd like to correct an error in my last post. I actually start my explination from scratch rather than correct it.

There are two main ways to get tax relief from tuition paid for medical school.

First, you can use the lifetime learning credit. This allows you to get 20% credit of up to $10,000 (max of $2000). Thus, you can subtract that amount from your tax owed -- you cannot get more back than you paid. Second, there is an above the line deduction for tuition of up to $4000.

You can't use both. For most folks, the LLC will be the best. However, for those who have a higher income, but a lower tuition, the deduction may work better. You have to run the numbers both way.

I hope this is more clear.

Ed

 

[HunterGatherer]

The credit and deduction are only for students currently in college? This does not apply to loans after you graduate?

I'd like to correct an error in my last post. I actually start my explination from scratch rather than correct it.

There are two main ways to get tax relief from tuition paid for medical school.

First, you can use the lifetime learning credit. This allows you to get 20% credit of up to $10,000 (max of $2000). Thus, you can subtract that amount from your tax owed -- you cannot get more back than you paid. Second, there is an above the line deduction for tuition of up to $4000.

You can't use both. For most folks, the LLC will be the best. However, for those who have a higher income, but a lower tuition, the deduction may work better. You have to run the numbers both way.

I hope this is more clear.

Ed

 

[ShyRem]

For loans after you graduate you can only take the student loan interest deduction. It's a line item on the 1040.

 

[edmadison]

The credit and deduction are only for students currently in college? This does not apply to loans after you graduate?

You use the deduction or credit for the tax year that you paid them. Thus, current interns can deduct/credit the tuition they paid for the Spring semester of 2005.

Ed.

 

[susan96]

When I used Turbo Tax, the program automatically put me down for a deduction instead of a credit. Is there a reason it would do that? I didn't make much last year, so I definately didn't go over the limit. Can I just manually change it to credit, and fill out the 8863?

 

[kilani]

What if you are currently in school, using loan money to pay for everything (tuition, living expenses) and not paying interest while in school, are there any tax breaks that you can claim in this situation 😕

 

[mpp]

Unless you are working and earning more than $15,000 per year, there are no income taxes to get a break from. But if you are earning income and paying tuition (even if it is with loans) you can take the lifetime learning credit.

 

[kilani]

Unless you are working and earning more than $15,000 per year, there are no income taxes to get a break from. But if you are earning income and paying tuition (even if it is with loans) you can take the lifetime learning credit.

I wont be working but my wife will be, and she will make more than $15,000, does the LLC still apply ?

 

[HunterGatherer]

I wont be working but my wife will be, and she will make more than $15,000, does the LLC still apply ?

I was curious about this as well since I will be doing a joint return next year with ym wife.

 

[mpp]

Yes, the LLC would apply. With the LLC and the standard deduction (or itemized deductions if you pay mortgage interest) she should end up owing no federal income tax (although state, FICA, medicare, workman's compensation, etc., are another matter).

 

[kilani]

Yes, the LLC would apply. With the LLC and the standard deduction (or itemized deductions if you pay mortgage interest) she should end up owing no federal income tax (although state, FICA, medicare, workman's compensation, etc., are another matter).

Thanks for the helpful information, it helps alot 🙂

 

[HunterGatherer]

I agree! 2 thumbs up! 👍 👍

Thanks for the helpful information, it helps alot 🙂