The Tuition and Fees Tax Deduction

"The Tuition and Fees Tax Deduction" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012

The tuition and fees tax deduction can reduce the amount of your taxable income by as much as $4,000 per year for tax year 2009. This deduction may benefit taxpayers who do not qualify for either the Hope or Lifetime Learning Education Tax Credits. It is taken as an adjustment to income, which means you can claim this deduction even if you do not itemize deductions on Schedule A of Form 1040. This tax benefit is also known as the Limited Deduction for Tuition Expenses or as the Torricelli Deduction. This deduction may be taken even if the taxpayer does not itemize. The deduction is currently set to expire at the end of 2009.

Self-supporting students, including those who borrow to pay tuition, are eligible to take this deduction. The deduction also provides relief to families whose AGI is too high to qualify for the Hope or Lifetime Learning tax credits. Single filers with AGI of up to $65,000 ($130,000 for joint filers) can deduct up to $4,000 annually in tuition and related expenses. This deduction is subtracted from your income, which means you can claim it even if you do not itemize your deductions on Schedule A of Form 1040. This deduction can benefit you if you do not qualify for either the American Opportunity/Hope credit or Lifetime Learning credit.

The Tuition Deduction allows a taxpayer to take a deduction for eligible college expenses paid on behalf of themselves, their spouse, or a dependent. The amount deducted must be reduced by any tax-free scholarships, grants, or awards received. This deduction is actually an “above the line” adjustment, which means you do not need to itemize your deductions to use it. In other words, you can take the standard deduction and still also deduct your tuition and fees. However, a taxpayer must choose between using this deduction or claiming one of the two tax credits also available for college expenses (Hope Scholarship or Lifetime Learning Credit).

The exact amount of the Tuition and Fees Tax Deduction depends on the amount of qualified tuition and related expenses paid for one's self, spouse, or dependent for whom the taxpayer can claim an exemption.

For tax year 2009, you can deduct up to $4,000 in tuition and fees required for enrollment or attendance at an eligible postsecondary institution. You cannot deduct expenses for personal, living or family expenses, including room and board, insurance, medical expenses and transportation.

The exact amount of the tuition and fees tax deduction depends on the qualified education expenses that you pay for yourself, your spouse or a dependent for whom you are entitled to claim an exemption on your tax return.

Qualification

An eligible taxpayer must:

An eligible educational institution is any college, university, vocational school or other post secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. According to the IRS, “it includes virtually all accredited public, nonprofit and proprietary post secondary institutions.” The college you attend can help you figure out whether it meets this requirement. You can claim the deduction yourself if you are not claimed as a dependent by another taxpayer.

You cannot claim the tuition and fees tax deduction if:

For tax year 2009, the maximum amount of qualified education expenses you can take into account in figuring your tuition and fees tax deduction is $4,000 if your MAGI is not more than $65,000 ($130,000 for married taxpayers filing jointly). If your MAGI is larger than $65,000 ($130,000 for married taxpayers filing jointly), but is not more than $80,000 ($160,000 for married taxpayers filing jointly), your maximum tuition and fees tax deduction is $2,000.

How do you get it?

To receive the deduction, the taxpayer must complete Form 8917, Tuition and Fees Deduction, and file it with Form 1040 or Form 1040A.

An eligible institution that received payment for tuition and fees in the 2009 tax year generally must have issued IRS Form 1098-T (the Tuition Statement) to each student by February 1, 2010. The information on that form will help you determine whether you can claim a deduction for 2009.

When is it available?

Generally, the deduction is allowed for qualified tuition and expenses paid in 2009 in connection with enrollment at an institution of higher education during 2009 or for an academic period beginning in 2009 or in the first three months of 2010. For instance, if you paid $1,500 in December 2009 for qualified tuition for a spring 2010 semester that begins in January 2010, you can use that $1,500 in calculating your 2009 deduction.

Can a family claim multiple benefits?

Your family can claim this deduction along with an American Opportunity/Hope credit, a Lifetime Learning credit, and an exclusion from gross income for certain distributions from qualified state tuition programs or education IRAs, as long as the same student is not used as the basis for each deduction, credit or exclusion and the family does not exceed the maximum Lifetime Learning credit (currently $2,000 per return).

You cannot take the tuition and fees tax deduction if you deduct tuition and fees expenses under any other provision of the law—for example, as a business expense. You generally cannot claim more than one benefit for the same qualifying education expense.

You also cannot claim the deduction if the tuition and fees were paid with a tax-free scholarship, grant or other education assistance. (Grants can include Pell Grants. Other assistance can include employer-provided education assistance and other non-taxable benefits received to pay for education expenses.)

Tuition and Fees Deduction at a Glance

QUESTION ANSWER
What is the maximum benefit? You can reduce your income subject to tax by up to $4,000
Where is the deduction taken? As an adjustment to income on Form 1040 or Form 1040A
For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption
What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living or family expenses, such as room and board (see note below)

Information courtesy of: Internal Revenue Service Publication 970 "Tax Benefits for Education"

Note:

For Your Information:
This information’s covers a variety of important tax topics related to higher education. It is intended for your educational use and not as legal or tax advice; it does not cover every facet or the full scope of this subject. We highly recommend that you consult a professional tax advisor or attorney and encourage you to visit the Internal Revenue Service Web site, where you will find the complete text of various relevant IRS publications.

IRS Publications

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