Taxes Higher Education Expenses That Qualify for Tax Breaks By Dana Anspach Dana Anspach Twitter Dana Anspach is a Certified Financial Planner and an expert on investing and retirement planning. She is the founder and CEO of Sensible Money, a fee-only financial planning and investment firm. learn about our editorial policies Updated on May 25, 2022 Reviewed by David Kindness Reviewed by David Kindness David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes. learn about our financial review board Fact checked by Emily Ernsberger Fact checked by Emily Ernsberger Twitter Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases. She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information. learn about our editorial policies Share Tweet Pin Email In This Article View All In This Article What Expenses Qualify? Examples of Tax Breaks for Education Expenses Online Resources for Eligibility Frequently Asked Questions Photo: BraunS / Getty Images If you want to head back to school, or help pay for a child or grandchild's educational expenses, you ought to know that certain types of expenses qualify for special tax treatment. Many retirement accounts and college savings accounts have rules that allow for special tax treatment for withdrawals that are used for qualified higher education expenses (QHEEs). Key Takeaways The IRS offers multiple forms of tax relief for students and those paying for education, so long as the payments are for qualifying expenses. 529 plans and individual retirement accounts (IRAs) are just two of the many types of investment accounts that offer tax breaks for funds used for school. Definitions and particular rules that outline education-related tax breaks can be found in detail at the IRS Tax Benefits for Education Center. Which Expenses Qualify for Special Tax Treatment? The IRS website defines qualified higher education expenses as: "Tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a student at an eligible educational institution. They also include expenses for special-needs services incurred by or for special-needs students in connection with their enrollment or attendance. In addition, if the individual is at least a half-time student, then room and board are qualified higher education expenses." Many schools or programs now require computers (perhaps even an iPad). If so, that expense would count as "equipment required for the enrollment or attendance of a student." And note that for part-time students, room and board expenses are subject to a cap. In case of an audit, make sure to keep any list of required equipment that the school provides, and any requirements provided in the class syllabus. Of course, you'll also want to keep receipts so you can show how much you paid for what. Note If the student may qualify for other benefits such as the Lifetime Learning Credit, then you may have to keep track of some thing called "adjusted qualified higher education expenses" (AQHEEs), and only the lower adjusted amount would be eligible for tax breaks on distribution Examples of Tax Breaks for Education Expenses There are many types savings and investment accounts that allow you to grow funds tax-free, such as 529 plans and Roth IRAs, so long as distributions are used for qualified higher education expenses. Early IRA withdrawals (before age 59 1/2) used for QHEEs will be exempt from the 10% early-withdrawal penalty tax, although the amount withdrawn would still be subject to ordinary income taxes. Students who are working while in school may be able to exclude certain benefits from taxable income as well, thereby decreasing their tax liability overall. Note You can learn more about this in IRS Publication 970 Tax Benefits for Education. Online Resources for Eligibility One of the best go-to sources for information is the IRS Tax Benefits for Education Center, as it is up to them as to what is and what is not considered a qualified educational expense. The easy-to-use information center will provide additional information on such topics as: Who can claim a tax credit for education expensesWhich tuition and fees are deductible (based on filing status)Whether or not student loan interest is deductible (based on Modified Adjusted Gross Income limits)Definition of a qualified student loanDefinition of qualified education expenses (tuition and fees, room and board, books, supplies, equipment, other expenses such as transportation)Determining how much room and board qualifiesDetermining whether work-related education can be claimed as a business deductionEducation required by employer or by legal stipulationsEducation to maintain or improve skills Frequently Asked Questions Is there an age limit for educational tax breaks? In most cases, whether you qualify for a certain tax break on your educational costs is not determined by your age. Other factors, such as full-time or part-time status, or what you use the funds for, will be more relevant. There are many unique tax breaks with their own rules. Breaks such as the Lifetime Learner Credit and certain educational deductions for work purposes are generally not available to traditionally younger college students. Can I claim educational expenses for tax purposes if I'm paying for someone else? Parents or family members will often set up special savings accounts for a child's future education. The tax perks that come with these accounts apply to the person who owns the account, and to making contributions and withdrawals. Employers who pay for ongoing education for their employees may be able to take a business-expense deduction. Can I use educational funds for things other than tuition? Most tax-preferential savings accounts and tax breaks will define educational expenses for the purposes of tax-free withdrawals or claiming deductions, and these often include room and board, books, supplies, and other costs necessary for education. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Internal Revenue Service. "Publication 590-B (2020), Distributions from Individual Retirement Arrangements (IRAs)." Internal Revenue Service. "Publication 970 (2021), Tax Benefits for Education." Internal Revenue Service. "Lifetime Learning Credit." Internal Revenue Service. "Topic No. 313 Qualified Tuition Programs (QTPs)."