College Apartment Doesn't Qualify For Renter's Deduction

Our daughter is a full time student at Purdue'
In prior years we have paid housing costs to her sorority'This semester she is
living in an apartment'Can my wife and I claim a deduction for the apartment
rental expenses in addition to the deductions that we use for our own home
(mortgage interest, taxes)? Can any of the sorority costs be deducted on our
taxes?

C.C., Indianapolis

I'm afraid you're out of luck on all counts'The only way you could construe a deduction for some of the apartment costs is if you actually own the apartment building'As a landlord you can take deductions for many of the costs associated with the rental property'As the person paying the rent, you receive no deduction.

Even the state of Indiana won't come to your rescue'There is a renter's deduction available on your state income tax return whereby you can deduct a portion of rent paid during the year (this deduction is now up to $2,000 for 1999)'However, the rent must be paid on the principal place of residence, which Indiana describes as the true, fixed, permanent home'Summer homes, and second homes do not qualify for the deduction.

In the case of your daughter, until she is finished with school and living on her own, your home is still her principal place of residence, so the renter's deduction isn't allowed for the rent you pay on her apartment at school.

Also, student housing, including dormitories, fraternities, and sororities, is specifically excluded from the Indiana renter's deduction.

You may, however, be able to defray some of your taxes by claiming a Lifetime Learning Credit for some of the costs associated with your daughter's schooling'The credit is computed by taking 20% of qualifying education expenses up to $5,000, for a maximum $1,000 credit for 1999'Qualifying expenses include tuition, lab fees, and other fees paid to the school as a condition of enrollment.

In addition, if your adjusted gross income is under $75,000, you may be able to take a deduction for interest paid on loans for your daughter's education costs'The maximum deduction, which is claimed on page one of your tax return, is $1,500 for 1999'The loan on which the interest was paid must be a loan exclusively for college costs 'these costs can include tuition, fees, housing, books, and transportation.

My wife and I are going to donate some clothing
and other household items to the Goodwill'My question is what IRS publication
can we use to determine the amount we can deduct from our federal income
tax?

M.R., Indianapolis

If only it were that easy! The IRS has never, to my knowledge, published price lists that show the value of donated items'Instead, they recommend that you go to a resale shop, like one of the stores run by Goodwill or the Salvation Army, and create your own price list based on the prices charged in the shop.

See how much items sell for and value your items accordingly, keeping in mind that the nicer items may sell for the high end of the price scale, whereas items that are well worn may go for substantially less.

Organizations such as Goodwill are reluctant to offer price suggestions over the phone, in part because the pricing varies depending on the quality and salability of the garments and other items.

Geography plays a part in the calculation as well'The resale shop in a large city may price items higher than the shop in a small town'If you donate your items in a location where they will command a higher resale price, your deduction can be higher.

Be sure to get a receipt from Goodwill acknowledging your donation and noting that you received nothing in return for your donated items'Also, you should create and keep a detailed list describing your donated items'The receipt and the list do not get attached to your tax return 'instead, keep these with your tax records for the year in which you take the deduction.

copyright © 2000 Gail Perry - Fun with Taxes

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