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Tax Deductions for Nursing Students

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If you`re a working nurse studying to earn an advanced nursing degree you`ll be happy to know that you may be entitled to lower your income tax bill by applying certain tax deductions. We`ll examine some of the deductions that you might qualify for below, but remember that everyone`s circumstances differ, so be sure to read IRS rules or consult with your tax professional before deciding which are appropriate for you.

Can I Claim Work Related Expenses?

Nursing uniforms, non-slip nursing shoes, protective gear, tools, equipment, or other work-related clothing and supplies required for your nursing job or nursing course are deductible. So is the cost of laundering and maintaining them. Professional membership fees, professional journal subscriptions, nursing license renewal fee, malpractice insurance premiums, union dues, and some additional deductions available to travel nurses are all examples of deductible work related expenses. Be sure to save your receipts!

In general, work related expenses can be deducted - but only if you itemize your deductions. This is not as straight-forward as you might assume, as it is usually only beneficial to itemize your deductions if your itemized deductions exceed your standard deduction. To determine which type of deduction will be of greater benefit to you, you will need to add up all of your expenses and see how this figure compares to your standard deduction.

Deducting Education Related Expenses

While you can`t deduct the cost of the initial nursing education that allows you to become a nurse in the first place, the good news is that you can deduct the cost of any additional education that you engage in to further your nursing career. Generally speaking, you need to be able to prove that you are improving your qualifications for either maintaining your job skills or improving them to get a better nursing position in order to meet the criteria for deducing education expenses.

This means that expenses you incur for required seminars, nursing continuing education courses required to maintain your license, tuition for an advanced nursing degree, or nursing certificate programs that you pay yourself are eligible for a tax deduction. You can claim a deduction for the cost of any course fees, books, stationery, internet connection, telephone calls, tools or equipment and travelling to and from work-related training courses.

The cost of parking, tolls, taxis and public transport if you are required to travel to attend seminars, conferences, meetings and training courses not held at your usual place of work, or between 2 or more jobs (if you need to stay away overnight you can also claim for the cost of all meals and your accommodation) can also be taken as a deduction.

Generally, the cost of further education that is intended to improve your existing job skills is subject to a 2% limitation status however, even if you don`t itemize you can claim up to $4,000 of qualified higher education expenses (tuition, books, fees, laptop), and up to $2,500 of student loan interest.

Tax Credits For Nursing Students

1. The American Opportunity Credit: A partially refundable tax credit tax credit of up to $2,500 of the cost of qualified tuition and related expenses such as books, supplies and equipment paid during 2009 and 2010. Eligible taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials paid during the taxable year. A taxpayer who pays qualified tuition and related expenses and whose federal income tax return has a modified adjusted gross income of $80,000 or less ($160,000 or less for joint filers) is eligible for the credit. The credit is reduced ratably if a taxpayer?s modified adjusted gross income exceeds those amounts. A taxpayer whose modified adjusted gross income is greater than $90,000 ($180,000 for joint filers) cannot benefit from this credit. Note: You cannot claim the tuition and fees tax deduction in the same year that you claim the American opportunity tax credit or the lifetime learning credit.

2. The HOPE Scholarship: For 2009 and 2010, the HOPE tax credit has been temporarily replaced by the American Opportunity Tax Credit, which has some more favorable benefits. Until it officially resumes, only families who have a minimum of one student enrolled in an eligible higher education institution in a Midwestern disaster area can apply.

For those who are eligible to currently apply, the $3,600 credit (per student) applies to the first two years of undergraduate study at an eligible institution on at least a half-time basis. It is non-refundable, which means that it can only be applied to tax that you owe. If your family is eligible to apply for the HOPE credit, you cannot also apply for the American Opportunity tax credit for any other students in the household.

To be eligible for the HOPE tax credit in 2009, your modified AGI needed to be $60,000 or less if you were filing alone or $120,000 if you were filing jointly. The actual amount that you receive may be less than $3,600 as factors such as your income, higher education expenses and the number of eligible students in your family are taken into account. To receive the tax credit, you need to owe taxes and file a tax return. If you are claimed as a dependent on the tax return of a spouse or parent, they must apply for the credit.

3. The Lifetime Learning Tax Credit: If you don`t qualify for the HOPE or American Opportunity tax credits, you may be eligible for the Lifetime Learning tax credit. This is less generous but is open to a greater number of students. To be eligible, you need to be enrolled in a study program at an eligible post-secondary institution but this is not restricted to degree programs. Like the HOPE tax credit, it is non-refundable and can only be applied to your taxable income to reduce the amount of tax that you owe.

Whereas the HOPE and American Opportunity tax credits have a per student threshold, the Lifetime Learning tax credit is limited to $2,000 per tax return. This rises to a maximum of $4,000 if one or more members of the family are enrolled in an institution in the Midwestern disaster area. To be eligible for the tax credit in 2009, your modified AGI needed to be $60,000 or less if you were filing alone or $120,000 if you were filing jointly.


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