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“Free” Learning for You


By Orlando Gotay

If you are of “a certain age,” you knew education as an activity that took place iner, classrooms. Bells rang, and one shuffled from room to room. At least that was part of my routine, a bit over 30 years ago at the US Naval Academy.

It is a huge understatement to say that the Internet has revolutionized many things, and education is certainly one. Early on, few schools provided online courses, perhaps not having the best caliber available. Today, most accredited institutions of higher learning provide really great online courses which, of course, allow folks like you and me to go to school far away—without setting foot in a classroom.

I was intrigued by the possibilities that distance learning can provide, coupled with the Lifetime Learning Credit. Credits reduce your tax bill, dollar for dollar. Many folks complain about their tax bill, and paying money to Uncle Sam. What if I suggested that you might spend some of it (you would anyway) getting something in exchange for your choosing right away?

The credit allows you to save up to US$2,000 per year on your tax bill. It is twenty percent of the first US$10K in “qualified education expenses. To me, a 20 percent “gift” is a lot of tacos. The student can be you, your spouse, or a dependent. Courses can be to pursue a degree, to obtain a recognized education credential (neither is required), or to acquire or improve job skills (whatever that means). Virtually all accredited public, nonprofit, and private postsecondary institutions qualify. My favorite: community colleges. Some institutions outside the US qualify as well. It is important to check ahead of time. At a minimum, tuition paid to the school counts as an expense to figure the credit. Sometimes, books and other items may be included, too.

Students do not have to be enrolled “full time.” A mere “half-time” load for at least one “academic period” (whether that’s a semester, a quarter, or other school unit) is all that is needed.

Of course, there are limitations to the credit. For example, if you earn too much, the credit may be either reduced or not available. Still, it is a fantastic way to get some learning under your belt, or to help your spouse or dependent get the gift of education—from you and Uncle Sam. Brag about your newfound knowledge, cerveza in hand! IRS Publication 970, Tax Benefits for Education, has all the details.

Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court, and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the tax matters of US expats in Mexico. He can be reached at Consult your tax advisor.


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