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There is nothing new here, other than a clarification that the IRS is sometimes overzealous in collecting tax.
The lifetime learning credit is a direct tax credit of 20% of your tuition up to $10,000 of tuition, or a $2000 maximum credit. The deduction for work related expenses is a miscellaneous itemized deduction subject to 2% rule. Deducting tuition by this method is much less lucrative than a direct tax credit.
Some workers whose income is too high to qualify for the lifetime learning credit will only be able to use the work related expense deduction, so this tax court case suggests that it may be easier for them to do so.
In your case, if you took the lifetime learning credit, you have received a larger tax benefit than the deduction. You should only amend your tax return if you paid more than $10,000 of qualified tuition in any year. You could then claim $10,000 of tuition for the credit, and the amount over $10,000 as a work related expense. But because work related expenses are a 2% itemized deduction, you may not get much benefit.
There is nothing new here, other than a clarification that the IRS is sometimes overzealous in collecting tax.
The lifetime learning credit is a direct tax credit of 20% of your tuition up to $10,000 of tuition, or a $2000 maximum credit. The deduction for work related expenses is a miscellaneous itemized deduction subject to 2% rule. Deducting tuition by this method is much less lucrative than a direct tax credit.
Some workers whose income is too high to qualify for the lifetime learning credit will only be able to use the work related expense deduction, so this tax court case suggests that it may be easier for them to do so.
In your case, if you took the lifetime learning credit, you have received a larger tax benefit than the deduction. You should only amend your tax return if you paid more than $10,000 of qualified tuition in any year. You could then claim $10,000 of tuition for the credit, and the amount over $10,000 as a work related expense. But because work related expenses are a 2% itemized deduction, you may not get much benefit.
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