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American Opportunity tax credit. Laptop?

RHCCapri 6,293 973 September 21, 2012 at 02:39 PM
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For 2012, the American Opportunity credit amounts to 100% of the first $2,000 of a college student's annual tuition and fees (no room and board costs) plus 25% of the next $2,000.

Taking 12 credit hours on-line and have a desktop PC that is several years old. Grants paid for most of my tuition and books. Is the purchase of a new $1000 laptop or PC a justified expense for the tax credit?

IRS is not specific http://www.irs.gov/uac/American-O...nd-Answers

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#2
I think your link has the answer.

Q7. Does an expenditure for a computer qualify for the American opportunity tax credit?
A. Whether an expenditure for a computer qualifies for the credit depends on the facts. An expenditure for a computer would qualify for the credit if the computer is needed as a condition of enrollment or attendance at the educational institution.
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Vague questions receive vague answers . . . . . .
#3
the max deduction is $2,500
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#4
Quote from LiquidRetro View Post :
I think your link has the answer.

Q7. Does an expenditure for a computer qualify for the American opportunity tax credit?
A. Whether an expenditure for a computer qualifies for the credit depends on the facts. An expenditure for a computer would qualify for the credit if the at the educational institution.
All classes are on-line, so yes a computer is needed as a condition of attendance. My old Dell 530 PC is already giving me grief so I should get a new laptop or PC. Does the IRS care if you get a $1000 unit with all the bells and whistles over a $299.97 Walmart POS?

As a chronic SDer I am always getting deals on last years closeouts instead of the latest and greatest. A new Windows 8 computer would be a real treat for me.
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#5
Quote from RHCCapri View Post :
All classes are on-line, so yes a computer is needed as a condition of attendance. My old Dell 530 PC is already giving me grief so I should get a new laptop or PC. Does the IRS care if you get a $1000 unit with all the bells and whistles over a $299.97 Walmart POS?

As a chronic SDer I am always getting deals on last years closeouts instead of the latest and greatest. A new Windows 8 computer would be a real treat for me.
I am not a CPA, so I can't tell you that.
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#6
Quote from RHCCapri View Post :
All classes are on-line, so yes a computer is needed as a condition of attendance. My old Dell 530 PC is already giving me grief so I should get a new laptop or PC. Does the IRS care if you get a $1000 unit with all the bells and whistles over a $299.97 Walmart POS?

As a chronic SDer I am always getting deals on last years closeouts instead of the latest and greatest. A new Windows 8 computer would be a real treat for me.
It would be best to ask your/a CPA or tax attorney.

With that said, I'm not either of those, but will tell you what my CPA tells me with similar themed questions: you should be able to justify why you needed that laptop for whatever reason you're stating you needed it for.

Why do you need a $1,000 laptop when there are laptops available for $250? Why do you need a laptop at all if you already have a computer? These aren't questions you need to answer here. However, you may want to consider how you would answer these if you were ever audited.

A business deduction must be what the IRS considers reasonable (actually, the IRS uses the phrase "ordinary and necessary"). Also, only the percentage of use of a particular thing that actually goes towards the business is deductible (such as with a vehicle). This is not a business deduction, but I would guess that the IRS would have the same approach to this type of deduction - however, I could be very wrong.

I would not try to use a deduction like this as an excuse to "treat" myself to a new, expensive laptop. But, that's just what I would do. You'll have to make your own decision.

Again, I'm not a tax expert and I do not fully understand our tax code (heck, there's not a single person alive that fully understands our tax code). With that said, again, your best bet is to either ask a CPA, ask a tax attorney, or go the safe route.

By the way, here's a laptop with Windows 8 for only $479.99 [dealnews.com].
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Last edited by Brian1 September 21, 2012 at 11:33 PM
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#7
Actually something like this Thinkpad-2 [examiner.com] may be more suited to my needs.

Since I am only going one term this year and will spend more than my $2500 tax credit limit next year, I might as well get something to see me through the next few years instead of my usual already obsolete when bought purchases.
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#8
u r in college and have to pay $2500 in tax?
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#9
Going back to college after many years, and the tax credit is refundable.

The more I think about it, a sub-$500 laptop is not going to be sufficient. Low-battery life, slow boot-up time, poor resolution screen, no backlit keyboard, etc. Yep, going to need something like an HP Envy, Dell XPS, an Ultrabook, a Slate or MicroSoft Surface tablet.
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#10
You can't deduct it. That's obvious. That said, you'll likely get away with it when you do.

It's not a requirement.
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#11
Quote from RHCCapri View Post :
Going back to college after many years, and the tax credit is refundable.

The more I think about it, a sub-$500 laptop is not going to be sufficient. Low-battery life, slow boot-up time, poor resolution screen, no backlit keyboard, etc. Yep, going to need something like an HP Envy, Dell XPS, an Ultrabook, a Slate or MicroSoft Surface tablet.
You succeeded in justifying over-paying for a computer. Go ahead and do it then.
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#12
Quote from Dem Bums View Post :
the max deduction is $2,500

It is a CREDIT not a DEDUCTION!
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#13
Quote from vaultaddict View Post :
You can't deduct it. That's obvious. That said, you'll likely get away with it when you do.

It's not a requirement.

Can you elaborate why you said it CANNOT be deductible?
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#14
Quote from mikve View Post :
Can you elaborate why you said it CANNOT be deductible?
It's not a condition of enrollment or attendance. That's not a grey area.
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#15
Quote from vaultaddict View Post :
It's not a condition of enrollment or attendance. That's not a grey area.
I am sorry, go and read again the IRS's rules.
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