3 non-standard cases when a tuition deduction can “burn out”

The tuition deduction is one of the most common deductions for individuals. But this does not negate some cases, in the event of which the deduction for treatment may disappear. In this article, we will analyze such situations.

General rules for obtaining a “student” deduction?
deduction can only be issued by tax residents who pay personal income tax on certain types of income

you paid expenses from your own funds (capital, sponsorship, etc. are not taken into account)

you studied at an educational organization with an appropriate license (or with a substitute document, if the educational institution is located abroad)

you paid for your own tuition or the tuition of your children, siblings under the age of 24 (provided they are full-time)

you are claiming a refund of previously paid tax for the same year in which you paid for the tuition

Now let’s look at a few cases where part of the deduction can be lost.

1. If you paid for the training in one amount, and not in installments
Very often, with long-term studies, payment is made in installments – per semester, year, quarter, etc. But many try to pay for all the tuition at once in order to “save money” in the future – so the price of tuition will not rise after some time. But consider whether it will really be beneficial for you.

The point is that the spending limit for all “social” categories (including the cost of your own education) is in total equal to 120,000 rubles per year, and in order to get the maximum deduction, it is better to spend no more than this amount per year. if you spend more, the refund will be calculated only from 120,000 rubles.

At the same time, the deduction limit for the education of children is even less – only 50,000 rubles per year.

That is, if, for example, you paid your own tuition for several years in one year and spent 250,000 rubles, then only 15,600 rubles will be returned to you (120,000 * 13%). And if you split the payment into two years – for one year you will pay 120,000 rubles, and in a year another 130,000 rubles, then for two years in a row you will be able to return 15,600 rubles. The amount that exceeds 120,000 rubles per year will not be lost.

2. If you claim other costs to be returned
If in one year you want to receive several deductions, for example, property and social (for tuition), then keep in mind the following.

Since the social deduction for education is not carried over to future years, then with small incomes, and, consequently, the amount of tax that you can return, it is more profitable to first receive a social deduction, and if there is an unpaid tax, then “choose” it as a property deduction. And since the property deduction can be carried over to the next years, you can easily get the balance in a year.

How it looks in practice. Let’s say you bought an apartment in 2021 for 2 million rubles and spent 80,000 rubles on your own education. in 2022, you will want to return the personal income tax paid for 2021 in the amount of 150,000 rubles. There are two design options:

In 2022, you claim the entire property deduction tax paid and get 150,000 rubles back. And the rest of the property return in the amount of 110,000 rubles (260,000 – 150,000) you will receive for the next (2023) year. In this case, training costs “burn out”, because they cannot be transferred.

You first specify the tax refund on tuition costs (80,000), plus a part of the costs 70,000 (150,000 – 80,000) choose property expenses. And you will receive the rest of the property return (260,000 – 70,000) in a year. In this case, nothing “burns out” and you get the maximum return.

3. If you did not work the year you studied
Many believe that in the absence of a permanent job, the tuition deduction will not be received. And even if you spent money on getting an education, but at the same time you do not work, the deduction will “burn out”. This is not true. In the absence of work, you can get a deduction. The main thing is that you have income taxed with personal income tax at a rate of 13%.

From 2021, such income, in addition to salaries, includes: income from renting out property, from the provision of various services, from the sale of property and some other income.

The main thing is that you have income and expenses in one calendar year. That is, for example, you can pay for training in January, while not working, but at the end of the year sell the car, pay from the sale of personal income tax and then return it at the cost of training.