Ask the Consul: Tuition Benefits for Dual Citizens

Question: If I am a dual citizen of the United States and Israel, am I entitled to any tax benefits to cover my university tuition?

Answer: Thank you for your question. If your parents are American citizens and they pay taxes in the United States and claim you as a dependent on their tax return, you may qualify for a tax credit. There are a variety of tax credits, deductions and savings plans available to taxpayers to assist with the expense of higher education. For example:

• A tax credit reduces the amount of income a taxpayer may have to pay.
• A deduction reduces the amount of a taxpayer’s income that is subject to tax, thus generally reducing the amount of tax a taxpayer may have to pay.
• Certain savings plans allow the accumulated interest to grow tax-free until money is taken out (known as a distribution), or allow the distribution to be tax-free, or both.
• An exclusion from income means that taxpayer won't have to pay income tax on the benefit they are receiving, but also won't be able to use that same tax-free benefit for a deduction or credit. 

For more information, visit the U.S. Internal Revenue Service (IRS) webpage “Tax Benefits for Education: Information Center” at http://www.irs.gov/newsroom/article/0,,id=213044,00.html.

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Ask the Consul is a regular feature on the Consular Round Up blog. Every few weeks, one of the Embassy's Consular Officers answers an interesting consular question we've received from one of our readers. Think you can stump us? To submit a question, leave a comment, post one on our Facebook wall or send us an email at NIVTelAviv@state.gov. We look forward to hearing from you!