Tuition and Fees Deduction
The Tuition and Fees Deduction was set to expire at the end of 2011, but was extended through 2013.
This deduction is another education tax benefit available to taxpayers who pay for higher education.
The Tuition and Fees Deduction may directly reduce your income subject to tax by up to $4,000.
You may be eligible for the Tuition and Fees deduction even if you do not qualify for the American Opportunity Credit or the Lifetime Learning Credit.
*Don’t worry about trying to figure out which education benefit is right for you. TurboTax will do this for you.
Now that congress has extended the Tuition and Fees Deduction, taxpayers may benefit from the following:
- Up to $4,000 reduction in income subject to tax.
- Deduction can be claimed even if you do not itemize deductions.
- Reduces AGI, which may qualify you for other tax deductions and credits.
- No limit on the number of years the deduction can be taken.
- Doesn't matter how many college courses you are taking at once.
You may be asking...
Who is eligible to claim the Tuition and Fees deduction?
There are a few requirements to qualify for the Tuition and Fees Deduction:
- You paid qualified education expenses of higher education.
- You paid education expenses for an eligible student. .
- The eligible student is you, your spouse, or your dependent who you can claim as an exemption on your return.
- Your modified adjusted gross income is less than $80,000 ($160,000 if married filing joint).
You are not eligible to claim the Tuition and Fees Deduction if any of the following applies:
- Your filing status is married filing separately.
- Another person can claim an exemption of the student on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption.
- You or your spouse was a non-resident alien for any part of 2012 and the non-resident alien did not elect to be treated as a resident alien for tax purposes
- You or anyone else claims an American Opportunity or Lifetime Lifetime Learning Credit in 2012 with respect to expenses of the student for whom the qualified education expenses were paid.
What expenses qualify for the Tuition and Fees Deduction?
The following expenses qualify for the Tuition and Fees Deduction:
- Qualified expenses paid for yourself, your spouse, or a dependent who you claim as an exemption on your tax return.
- Qualified expenses paid in 2012 for enrollment during 2012 or paid for the first 3 months of 2013.
- Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.
- Student-activity fees and expense for course-related books, supplies, and equipment only if the fees are paid to the institution as a condition of enrollment or attendance.
What expenses do not qualify for the Tuition and Fees Deduction?
The following expenses do not qualify for the Tuition and Fees Deduction:
- Room and board
- Medical Expenses(including student health fees)
- Similar personal, living, or family expenses.
- Courses of instruction that involve sports, games, or hobbies, or any non-credit course unless course of instruction is part of the degree program.
What is an eligible institution?
An eligible educational institution is any college, university, vocational school, or post-secondary educational institution eligible to participate in a student aid program administered by the US Department of Education.
It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) post secondary institutions.
What is an eligible student?
The following are necessary to be considered an eligible student:
- The student is you, your spouse, or your dependent who you can claim as an exemption on your tax return.
- Student is enrolled in one or more courses at an eligible educational institution.
- Student must have either a high school diploma or GED.
What form or statement will I receive indicating the expenses I paid for education?
You should receive Form 1098-T from an eligible educational institution by February 1, 2013. The institution may choose to report either payment received (box 1), or amounts billed (box 2).
For more information on Form 1098-T click on Form 1098-T : Tuition Statement
*Don’t worry about how to figure out the correct amount for deduction. TurboTax guides you through what expenses to deduct and easily handles the calculations for you.
Can both my dependent and I claim the Tuition and Fees Deduction for the same expenses?
Either you or your dependent can claim the Tuition and Fees Deduction, but not both of you.
The rules regarding who can claim the Tuition and Fees deduction are a little different from the rules for claiming the education credits.
Generally, in order to claim the Tuition and Fees deduction for a dependent, you must:
- Have paid the expenses, and
- Claim the exemption for the student as a dependent.
Under the Education Credits rules, if your dependent pays for qualified expenses and you claim the student as a dependent, you would be able to take the credit.
However, under the Tuition and Fees Deduction no one would be allowed to take the deduction in this situation.
These rules can be a little complicated, but TurboTax can easily figure out who gets the deduction.
As a tax planning tool you may want to use the chart below so that both you and your dependent don’t miss out on the deduction in the future.
|Your Dependent Paid |
All Qualified Expenses
|You Paid All Qualified |
|Your Relative Paid |
All Qualified Expenses
|Claim an exemption |
for your dependent
|No one is allowed to take a deduction||Only you can take the deduction||No one is allowed to take the deduction|
|Do not claim exemption, |
|No one is allowed to take the deduction||No one is allowed to take the deduction||No one is allowed to take the deduction|
|Are not eligible to claim |
an exemption for
|Only your dependent can take the deduction||Only your dependent can deduct the amount you paid. The amount you paid is treated as a gift to your dependent||Only your dependent can take the deduction|
Can I claim both the Tuition and Fees Deduction and one of the education credits at the same time?
No. There are no double benefits allowed. You have to choose either the Tuition and Fees Deduction or one of the Education Credits.
Not sure which alternative is best for you? TurboTax will choose the deduction or credit that gives you the greatest tax benefit.
Why did I not receive the entire $4,000 deduction?
The amount of your deduction can depend on the amount of your modified adjusted gross income. If your Modified Adjusted Gross Income (MAGI) is less than $65,000 ($130,000 married filing joint) then your maximum tuition and fees deduction is $4,000.
If your MAGI is between $65,000 and $80,000($130,000 and $160,000 married filing joint) then your maximum tuition and fees deduction is $2,000.
If your MAGI is more than $80,000 ($160,000 married filing joint) then your tuition and fees deduction is 0.