Deduction for Higher Education
You can deduct qualifying expenses paid in the tax year for:
- Education during in the year, or
- Education that begins during the year, or
- Education that begins during the first three months of the following year.
Qualifying expenses include what you pay in tuition and mandatory enrollment fees to attend any accredited public or private institution above the high school level.
You cannot take a deduction for:
- Room and board, optional fees (such as for student health insurance), transportation, or other similar personal expenses.
- Course-related books and supplies, unless you are required to buy them directly from the school.
- Any course involving sports, games or hobbies, unless it’s part of the degree program.
You have to subtract any scholarships, educational assistance, or other nontaxable income spent for educational purposes (other than gifts or inheritances). For example, if your employer offers a tuition reimbursement plan as a fringe benefit that pays $1,000 of the cost of a $1,500 course, only the remaining $500 would count for purposes of this deduction.
Qualified expenses you pay for yourself, your spouse or your dependents are eligible for the deduction.
- If you can be claimed as a dependent on your parents' or someone else's tax return, you cannot claim the higher education deduction.
- If you are married and choose the married filing separately tax status, you cannot take this deduction.
The deduction is $0, $2,000 or $4,000 depending on your Modified Adjusted Gross Income (MAGI).
- $4,000 deduction for MAGI of $65,000 or less ($130,000 or less for joint returns).
- $2,000 deduction for MAGI between $65,001 and $80,000 (between $130,001 and $160,000 for joint returns).
- $0 if your MAGI exceeds these limits.
You can't deduct or take a credit for the same expense twice.
If you deduct these expenses under some other provision of the tax code, such as for employee or business expenses, you cannot also deduct the expenses for the Tuition and Fees Deduction.
Also, you can’t deduct expenses paid with tax-favored money including:
- Tax-free interest from savings bonds
- Tax-free earnings from qualified state tuition program (Section 529 Plans)
- Tax-free earnings from Coverdell Education Savings Account
The Tuition and Fees Deduction cannot be combined with the American Opportunity or Lifetime Learning credits for any single student in a single tax year.