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Posted by Herb Smith on February 18, 2007, 7:14 am
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xzebr...@aol.com wrote:
> In the 2006 case where a below phase-out taxpayer pays
> out-of-pocket $14k of qualifying tuition for the same
> dependent-student (and all other qualifying rules are met),
>
> can anybody provide an authority for claiming a Lifetime
> Credit of 20% x $10k and also claiming a Tuition and Fees
> deduction for $4k?, (or any combination), where there is no
> double benefit (credit and deduction) for the same expenses.
>
> The applicable IRS pub and most discussions says that the
> Lifetime Credit and the Tuition Deduction cannot be claimed
> "as a double benefit" in the same year "for the same
> individual." =A0However, the meaning of this could reasonably
> be interpreted to mean a double benefit "for the same
> expenses."
>
> A well known financial adviser recently writes that a Hope
> or Lifetime credit =A0*can* be combined with the Tuition
> deduction - "but not for the same expenses." This =A0is
> different than the literal reading of the IRS pub. =A0Now that
> I have thought about it, =A0I'm not certain that the financial
> adviser is right or wrong.
>
> Rereading IRC 222 and 25A, and the regs, there is ambiguity
> and the word "expenses" =A0is often used. Also, all examples
> are for smaller tuition amounts which seem to imply rules
> for a non-duplication of credit/ deduction benefits for the
> *same expenses.*
>
> Would appreciate any comments. =A0Okay to tell me if it seems
> I'm trying to rewrite the statute too!, but it is not
> crystal clear.
Can it be any clearer than the following from Pub 970?
<< You cannot do any of the following.
Deduct qualified education expenses you deduct under any
other provision of the law, for example, as a business
expense.
Deduct qualified education expenses for a student on your
income tax return if you or anyone else claims a Hope or
lifetime learning credit for that same student in the same
year.
Deduct qualified education expenses that have been used to
figure the tax-free portion of a distribution from a
Coverdell education savings account (ESA) or a qualified
tuition program (QTP). For a QTP, this applies only to the
amount of tax-free earnings that were distributed, not to
the recovery of contributions to the program. See Figuring
the Taxable Portion of a Distribution in chapter 7
(Coverdell ESA) and in chapter 8 (QTP).
Deduct qualified education expenses that have been paid with
tax-free interest on U.S. savings bonds (Form 8815). See
Figuring the Tax-Free Amount in chapter 10.
Deduct qualified education expenses that have been paid with
tax-free scholarship, grant, or employer- provided
educational assistance. See the following section on
Adjustments to Qualified Education Expenses.
>>
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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