Tax Deductions


You may be able to deduct some higher education expenses when you complete your income tax return for the tax year in which you paid those expenses. Because your eligibility to take these deductions depends on a number of factors, you should review IRS Publication 970, "Tax Benefits for Education," and you may want to consult an IRS representative or a tax adviser.

Here's an overview of the deductions for which you may qualify if you have expenses for higher education.

TUITION AND FEES

You may be able to reduce your adjusted gross income (AGI), which in turn reduces your taxable income, by up to $4,000 for qualified higher education expenses that you paid during the tax year.

In general, higher education expenses that qualify for the deduction are tuition and fees paid for you, your spouse, or a dependent. You may include student activity fees and fees for course books, supplies, and equipment if you were required to pay those fees in order to attend the school. Room and board are not eligible expenses.



You may not claim this deduction and higher education tax credits — such as American Opportunity or Lifetime Learning credits — for the same student in the same year.

You may qualify for this reduction if you're a single taxpayer with a modified adjusted gross income (MAGI) of $65,000 or less, or married with modified AGI of $130,000 or less, and you file a joint return with your spouse. If your AGI is more than the limit for the full deduction, you may qualify for a deduction of up to $2,000 if you are a single taxpayer with a modified AGI of up to $80,000 or a married taxpayer filing a joint return who has a modified AGI of up to $160,000.

STUDENT LOAN INTEREST

You may be able to reduce your adjusted gross income (AGI), which in turn reduces your taxable income by up to $2,500, for interest paid during the tax year on your student loans. You can continue to qualify for this deduction as long as you are repaying your loan.



Deductible interest includes loan origination fees, capitalized interest, and interest payments on loans and lines of credit you've taken to pay qualified educational expenses for yourself, your spouse, or a dependent student enrolled at least half-time in a degree or certificate program or another recognized educational credential. Interest payments you make before those payments are due are also deductible. Interest paid on loans from a relative or made under a qualified employer plan does not qualify for the deduction.

If your modified AGI is less than $60,000, or $120,000 if you are married and filing jointly, you qualify for the full deduction. If you are a single taxpayer with a modified AGI of $60,000 or more, but less than $75,000, you can take a partial deduction. Married taxpayers with modified AGI of $120,000 or more, but less than $150,000, may qualify for a partial deduction if they file a joint tax return.