The Higher Education Tuition and Fees Tax Deduction can often aid taxpayers whose income is too high for the American Opportunity (formerly, Hope) or lifetime learning credit. Taken as a deduction for adjustment to income, the tuition and fees tax deduction can decrease taxed income by up to $4,000. The credit includes online learning. Taxpayers can take advantage of this deduction for college-incurred costs without itemized deductions on Form 1040.
You may be able to deduct qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent, as a tuition and fees deduction. Tuition and fees for enrollment and attendance are deductible; personal and living expenses are not. To determine whether your expenses are qualified, refer to Publication 970, Tax Benefits for Education. You do not have to itemize to take this deduction. You can claim qualified tuition and fees as either: (1) a tuition and fees deduction; (2) an American Opportunity or Lifetime Learning credit; or (3) if applicable, a business expense. You do not have to itemize to claim qualified tuition and fees unless you claim them as a business expense. If you claim qualified tuition and fees as a tuition and fees deduction, the deduction is taken as an adjustment to income on Form 1040 or Form 1040A.
You cannot take the tuition and fees deduction on your income tax return if your filing status is married filing separately, or if you may be claimed as a dependent on someone else's return. The deduction is reduced or eliminated if your modified adjusted gross income exceeds certain limits (see below) that depend on your filing status. You cannot claim the tuition and fees deduction and an American Opportunity or Lifetime Learning credit for the same student. If the educational expenses are also allowable as a business expense, the tuition and fees deduction may be claimed in conjunction with a business expense deduction, but the same expenses cannot be deducted twice.
You cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance. The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan.
The maximum amount of the tuition and fees deduction you can claim is $4,000 per year. The deduction is further limited by income ranges:
- $4,000 max for income up to $65,000
($130,000 for joint filers)
- $2,000 max for income over $65,000 up to
$80,000 ($160,000 for joint filers)
- no deduction for income over $80,000
($160,000 for joint filers).