Any Tax Whizzes?

MarathonMan88
Mon, 02 Feb 2009 09:33:23 +0000

I’ve started on this year’s taxes, and have hit a snag that I’ll bet others will run into in one form or another. I’m going to take the Higher Education Tuition and Fees Deduction, since we don’t qualify for the Hope or Lifetime Learning Credit, but I believe that the same situation applies to these as well: you’re not allowed to claim as a deduction any tuition you paid with the earnings portion of a 529 or with withdrawls from a (Coverdale) Education Savings Account.

We paid roughly 4500 in qualified, but non-tuition expenses (books, room & board, fees) and 2000 in tuition, thanks to scholarships and employee tuition benefits. Of this $6500, we paid almost exactly 4500 of the bill from an ESA and from the earnings portion of a 529. Can I still claim a $2,000 tuition deduction under the Higher Ed deduction? That is, can I allocate that money in the way that gets me the biggest tax break, effectively saying, “I used the ESA and 529 interest money to pay qualified, but non-tution expenses, and used ‘my own’ money to pay tuition.”

I’ve been through the voluminous IRS publication on these education deductions, and can’t seem to find the answer, though I’m sure it’s there somewhere.