Getting Friendly With the Tax Laws That Give You a Break to Help You Educate Further

Let’s say that you wish to finally take the plunge: the job market is terrible, you’ve keep hearing about how everyone needs to go back to school and learn new skills for a new world, and you’re finally going to do it; as unpleasant as the whole scenario seems. It could be expensive of course. But not everything is stacked against you. The government tries to make it as painless as possible with tax laws that give you all kinds of tax breaks. It’ll help you keep your head above the water for as long as you are in school. Let’s take a closer look.

For some people, the lifetime learning tax credit and the tax deduction for tuition can actually give them a break that extends as far $6000 a year. Not all people can breezily qualify for these. Thankfully, the tax laws rule that there still are other education tax breaks that you can take advantage of. Let’s start with where you work; your company is likely to have an educational assistance program if it’s at least midsize company. What that means to you is that you get more than $5000 in tax-free reimbursements every year. How do you know what to ask for? Section 127 of the IRS code deals with this, and that’s what you need to ask for.

If the education you seek has something to do with improving yourself for the job you are in right now – if, that is, your employer or the government actually needs you to have those additional qualifications if you are to keep your job, or if the education you seek can provably make you bitter at the job you hold, you could well claim as much tax-free reimbursements as you need. What won’t be a good fit for this kind of a tax break is if you are trying to train yourself for an entirely different kind of profession. If your employer is one of those rare kinds that will pay for for your education even if it means that you need to leave your current position to take advantage of the new qualifications, whatever payment you receive from your employer for it is considered taxable income. That’s what the tax laws say.

What if your employer isn’t the generous kind who should have any time to help out their employees with further education? You will still be able to write off your education expenses on your income tax return. You just need to do it under Itemized Deductions on Schedule A; that’s where the other itemized deduction items appear – things like investment expenses or tax preparer’s fees. If what you are studying for is an undergraduate degree, the IRS thinks that you’re trying to train yourself for a new kind of profession, and you aren’t allowed to deduct those fees and expenses. The same thing goes for MBAs as well.

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