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2006 Education Tax Deductions You Should Know About

It is rather ironic that we spend billions of dollars on other countries, but paltry sums on our own education system. Still, the federal government is offering a few tax incentives this year.

Our education system is a bit of a mess. There is a lot of debate as to why and the blame game is in full motion. Regardless, nobody seems to know how to really fix it. The problem is really two fold. Schools dont have enough money to do the job properly. On the other hand, people dont have much money to throw at the problem. The cost of sending a child to college these days is enough to reduce a grown man to tears. To say it is expensive is a minor understatement.

When faced with these types of problems, the federal government typically tries to take the financial approach. This approach is all about modifying behavior through taxes. If the government doesnt want you to do something, they tax the heck out of it. If they do want you to do something, they give you tax breaks. Here is the governments approach this year when it comes to education, at least the new things it is offering that can help you when filing your 2006 taxes.

Tuition and Fees Deduction If you are paying for your kids to go to school, there is some good news on the tax front. You can deduct up to $4,000 for the tuition and fees you pay. The rules are complex. There are also caps on the deduction based on your income levels. Make sure to run the deduction by your accountant to find out if you can claim it and for how much.

Educator Expense Deduction If you are a teacher or educator, the government hasnt forgotten you. It hasnt exactly helped you a lot, but at least it has done something. If you buy supplies for teaching your students, you can claim a deduction for them. That is the good news. The bad news is it is capped at $250. To claim the deduction, you need receipts. You had to work 900 hours during 2006 as a teacher, instructor, counselor, aid or principal. Importantly, this deduction was extended at the last moment, so instructions for claiming it are not on the 1040 forms. Visit the IRS site to find out how to get the deduction.

The old saying is any tax break is a good tax break. If you have education related expenses, the above should help you at least a bit with your tax bill for 2006.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax deductions.

posted by rfv @ 7:13 PM