Oregon Tax Consultants Practice Exam

What expense is NOT included as a qualified education expense for the American Opportunity Credit and the Lifetime Learning Credit?

1. Uniform costs

2. Insurance

3. Textbooks

4. Laboratory fees

The correct answer is: Insurance

The American Opportunity Credit and the Lifetime Learning Credit are both designed to help taxpayers offset the costs of higher education. Qualified education expenses for these credits generally include tuition and fees, certain course materials, and other necessary expenses directly related to a student's education. Uniform costs, while they may be necessary for certain programs, are generally not categorized under qualified education expenses for these credits. Textbooks and laboratory fees are explicitly allowed as part of the qualified expenses because they are directly related to the courses being taken. Insurance, on the other hand, does not qualify as an education-related expense under these credits. It is considered a personal expense and does not directly contribute to the educational process. Therefore, since insurance lacks the connection to tuition, fees, and other materials required for courses, it is correctly identified as the expense that is NOT included as a qualified education expense for the American Opportunity Credit and the Lifetime Learning Credit.