Education deduction/credits/Misc. 2% deduction

[Tobey]

New member, first post. Just spent an hour scanning the message board and found it to be informative, enjoyable, entertaining. But did not find this one. Here's my clients situation: TP and spouse both teachers. Both taking graduate level courses that count toward required continuing education. TP has $4425 tuition cost, and is taking $4,000 adjustment on line 34. Spouse has $3595 tuition costs, and is taking $719 lifetime learning credit. I want to put the excess tuition $$ in 2% misc deductions on schedule A. Is this a legitimate treatment? TTB 4-25 states "no double benefit allowed" if same expense is used under other provision of the law, ie tuition & fees deduction or education tax credits. Have we used the excess $425 from TP's tuition? What about the excess $2876 from spouse's tuition? Anyone encounter this situation before?

[Bees Knees]

The key word in TTB, page 4-25 is the same expense cannot be used under any other provision of the law.

If you have $4,425 in tuition costs and take $4,000 on line 34 of the 1040, and $425 as a 2% misc itemized deduction, did you take the same expense on two different lines?

No.

Expense in tax lingo means $$$ spent.

[BOB W]

Educator Expense....

.. Don't forget the $250 AGI deduction before you consider 2% deduction for the t/p with excess expenses.You probably took this ed expense but thought I would throw it in to this thread any.

[Unregistered]

.. Don't forget the $250 AGI deduction before you consider 2% deduction for the t/p with excess expenses.You probably took this ed expense but thought I would throw it in to this thread any.

The Educator expense deduction is only for supplies, etc used in the classsroom. (That could not have been reimbursed had the teacher filled out the required paperwork.) Educator education doesn't qualify.

[Tobey]

Thank you for your input. Yes, they already got their $250 (each) educator expense adjustments, but I agree with unregistered that had they not, this would not be appropriate place to take any excess tuitin costs. BeesKnees: After sleeping on this, I too concluded that we had not used the $425 excess for the TP, and that I should add it into 2%misc. Thanks for the confirmation. What about the spouse? Her total tuition WAS used in calculating the credit of $719. So I should NOT put any of the difference into 2%. Am I reading this correctly?

[BOB W]

Educator Expense....

Gee, I have always deducted education for teachers as well as supplies in the 2% misc prior to the lifetime credit. When did that change?

I mis-read your reply--- educators $250 is for supplies only...

[Tobey]

re: Educator Expense

Interesting. Maybe with the beginning of tuition credits/adjustments? Since their tuition expenses are for graduate level courses that also fulfill the requirement for continuing education, it seems to me that there is certainly the choice of how to treat these expenses, either as job related or under the education benefits options. I played around with this on my clients' return and there is a $200 benefit to them if I take the adjustment and credit as I stated in my first posting. Another factor is that these clients also have union dues that more than cover the 2% threshhold for misc. deductions, so that is not a factor affecting the tuition treatment. Next time you have this situation, maybe you should check it both ways.

[roruss]

Encountered a similar situation with MBA expense. Hope this helps...

http://www.nysscpa.org/cpajournal/2005/905/essentials/p50.htm

By the way, I've been checking out this forum and have found a wealth of information...

Russ

[BOB W]

Creative Solutions...

My tax program, Ultra tax, does that for me. Any excess AGI deduction, I through into 2% misc. The program takes into consideration any benefit effecting state taxes as well. All I need do is click OK when this side calculation is done.

[Gene V]

Ultra tax

John from New York,
So does my program (Lacerte) I ‘m learning so many new things that the programs does automatically, that I didn’t know last year, for instance; If you list the occupation as student, the program gives you a warning that the person doesn’t qualify for the 8880 credit, there are so many little warning like that, I wonder how many other programs perform this well.
I think what I like most about the higher price programs, is that it does multi-state and your own state automatically.

[BOB W]

Higher priced programs...

.... I had mentioned in a previous thread about the "bells and whistles" that are part these so called "high priced programs", they pay for themselves during the tax season by giving consistent application of tax law on each tax return. I believe it was you that said, "you get what you pay for". Well, I sometimes catch myself when I check "diagonistics" and there is a blaring omission that I never made before but did this time. I find great reminders as well during the diagnostic phase of completing a tax return.

Give me those "bells & whistles" every time..............consistency on every tax return is my goal.