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Columns: Tax Talk
George Saenz, CPA   Expert: George Saenz, CPA
Tax Talk
Foreign study could qualify for tax breaks
Tax Talk

Tax benefits abroad

Dear Tax Talk:
My wife attended the University of Madrid last summer. Is her tuition tax deductible like it would be at an American university?
-- Greg

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Dear Greg,
While there are numerous tax benefits for higher education expenses, the rules don't necessarily provide for the student enjoying a summer in sizzling Madrid at taxpayers' expense.

There are basically three types of tax benefits for higher education expenses:

  1. The Hope Credit
  2. The Lifetime Learning Credit
  3. The tuition and fees deduction

While your wife may have had an excellent opportunity to study in Madrid, the rules governing these benefits could be subject to taxpayer abuse if a tax credit or deduction were allowed for just any foreign university studies.

In order to qualify, the tuition and fees have to be paid to an eligible education institution. An eligible educational institution is any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited public, nonprofit and proprietary (privately-owned, profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution. Certain educational institutions located outside the United States also participate in the U.S. Department of Education's Federal Student Aid, or FSA, programs.

While the rules do include certain foreign schools, a search of the Web finds very limited choices. Foreign education could still be deductible as an itemized deduction if it is work-related. Chapter 12 of Publication 970 provides additional detail on claiming education expenses as work-related.

Bankrate.com's corrections policy -- Posted: Dec. 5, 2007
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