Resources:
- IRS Publication 970, Chapter 6: Tuition and Fees Deduction
- 2014 Form 1098-T: Tuition Statement
- 2013 Form 8917, Tuition and Fees Deduction
Why YOU Should Care:
If you qualify, you may be able to deduct qualified education expenses of up to $4,000.
What is it?
The tuition and fees deduction allows you to deduct up to $4,000 of qualified expenses for higher education. This deduction reduces the income you have subject to taxes.
You cannot claim this deduction for the same expenses for which you are claiming either the Lifetime Learning Credit or the American Opportunity Tax Credit, so it is in your best interest to determine which education benefit is most advantageous each year.
Who is an eligible student?
An eligible student is someone enrolled in one or more classes at an eligible institution.
You can claim this deduction for yourself, your spouse, or your dependents for whom you claim exemptions. You must not be filing under the Married Filing Separately status or if you were a non-resident alien for the year.
Which expenses qualify?
Tuition and fees for enrollment at an eligible institution are considered for this deduction.
Each qualifying student should receive a Form 1098-T from the educational institution listing the qualified expenses. If there are additional expenses not listed on the Form 1098-T, you must retain documentation supporting the expense.
Which expenses do NOT qualify?
- Room and Board
- Transportation
- Health Insurance and Medical Expenses
- Student Fees (unless required for enrollment)
You are also prohibited from including any expenses covered by a separate credit or reimbursement program or scholarship. Additionally, if you withdraw from a course and obtain a refund, those expenses do not count.
How do I claim the deduction?
Your deduction is limited by the amount of your modified adjusted gross income (MAGI). For 2013, those limits are listed below. These limits are adjusted annually and may increase for 2014. As of publishing, the 2014 rates are not available.
- If your MAGI is less than $65,000 for a Single taxpayer or $130,000 for taxpayers filing Married Filing Jointly, your maximum deduction is $4,000.
- If your MAGI is between $65,001 and $80,000 for a Single taxpayer or between $130,001 and $160,000 for taxpayers filing Married Filing Jointly, your maximum deduction is $2,000.
- No deduction is allowed if your MAGI is over $80,001 for a Single taxpayer or $160,001 for taxpayers filing Married Filing Jointly.
To claim the deduction, complete a Form 8917, Tuition and Fees Deduction, and file it with your annual tax return.
