You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education, as explained later under What Expenses Qualify
The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.
Table 19-2 summarizes the features of the tuition and fees deduction.
You may be able to take a credit for your education expenses instead of a deduction. You can choose the one that will give you the lower tax. See chapter 35, Education Credits
, for details about the credits.
The following rules will help you determine if you can claim the tuition and fees deduction.taxmap/pub17/p17-101.htm#en_us_publink100094845
Generally, you can claim the tuition and fees deduction if all three of the following requirements are met.
- You paid qualified education expenses of higher education.
- You paid the education expenses for an eligible student.
- The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return.
You cannot claim the tuition and fees deduction if any of the following apply.
- Your filing status is married filing separately.
- Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption.
- Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return).
- You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Publication 519, U.S. Tax Guide for Aliens.
- You or anyone else claims a Hope or lifetime learning credit in 2008 with respect to expenses of the student for whom the qualified education expenses were paid.
|Table 19-2.||Tuition and Fees Deduction at a Glance|
| ||Do not rely on this table alone. Refer to the text for more details.|
|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, line 34, or Form 1040A, line 19.|
|For whom must the expenses be paid?|| ||A student enrolled in an eligible educational institution who is either: |
• 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. |taxmap/pub17/p17-101.htm#en_us_publink100094848
The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or your dependent(s) for whom you claim an exemption on your tax return. Generally, the deduction is allowed for qualified education expenses paid in 2008 in connection with enrollment at an institution of higher education during 2008 or for an academic period (defined earlier under Student Loan Interest Deduction
) beginning in 2008 or in the first 3 months of 2009.
You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. You use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account.taxmap/pub17/p17-101.htm#en_us_publink100094849
You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws.taxmap/pub17/p17-101.htm#en_us_publink100094850
For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.taxmap/pub17/p17-101.htm#en_us_publink100094851
An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.
Certain educational institutions located outside the United States also participate in the U.S. Department of Education's Federal Student Aid (FSA) programs.taxmap/pub17/p17-101.htm#en_us_publink100094852
Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.taxmap/pub17/p17-101.htm#en_us_publink100094853
The definition of qualified education expenses is expanded for students in Midwestern disaster areas. In addition to tuition and fees required for enrollment or attendance at an eligible educational institution, qualified education expenses for students in Midwestern disaster areas include the following.
- Books, supplies, and equipment required for enrollment or attendance at an eligible educational institution
- For a special needs student, expenses that are necessary for that person's enrollment or attendance at an eligible educational institution.
- For a student who is at least a half-time student, the reasonable costs of room and board, but only to the extent that the costs are not more than the greater of the following two amounts.
- The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
- The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.
You will need to contact the eligible educational institution for qualified room and board costs.
You cannot do any of the following.
- Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense.
- Deduct qualified education expenses for a student on your income tax return if you or anyone else claims a Hope or lifetime learning credit for that same student for the same year.
- Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and in chapter 8 (QTP) of Publication 970.
- Deduct qualified education expenses that have been paid with tax-free interest on U.S. savings bonds (Form 8815). See Figuring the Tax-Free Amount in chapter 10 of Publication 970.
- Deduct qualified education expenses that have been paid with tax-free scholarship, grant, or employer-provided educational assistance. See the following section on Adjustments to qualified education expenses.
If you pay qualified education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. You must reduce the qualified education expenses by the amount of any tax-free educational assistance and refunds you received.taxmap/pub17/p17-101.htm#en_us_publink100094856
- The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970),
- Pell grants (see chapter 1 of Publication 970),
- Employer-provided educational assistance (see chapter 11 of Publication 970),
- Veterans' educational assistance (see chapter 1 of Publication 970), and
- Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance.
Qualified education expenses do not include expenses for which you, or someone else who paid qualified education expenses on behalf of a student, receive a refund. (For information on expenses paid by a dependent student or third party, see Who Can Claim a Dependent's Expenses
If a refund of expenses paid in 2008 is received before you file your tax return for 2008, simply reduce the amount of the expenses paid by the amount of the refund received. If the refund is received after you file your 2008 tax return, see When Must the Deduction Be Repaid (Recaptured), in chapter 6 of Publication 970.
You are considered to receive a refund of expenses when an eligible educational institution refunds loan proceeds to the lender on behalf of the borrower. Follow the above instructions according to when you are considered to receive the refund.taxmap/pub17/p17-101.htm#en_us_publink100094858
Do not reduce qualified education expenses by amounts paid with funds the student receives as:
- Payment for services, such as wages,
- A loan,
- A gift,
- An inheritance, or
- A withdrawal from the student's personal savings.
Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations.
- The use of the money is restricted to costs of attendance (such as room and board) other than qualified education expenses.
- The use of the money is not restricted and is used to pay education expenses that are not qualified (such as room and board).
Qualified education expenses do not include amounts paid for:
This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.
Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify.taxmap/pub17/p17-101.htm#en_us_publink100094862
Some eligible educational institutions combine all of their fees for an academic period into one amount. If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. See How Do You Figure the Deduction
, later, for more information about Form 1098-T.
For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). The student must have either a high school diploma or a General Educational Development (GED) credential.taxmap/pub17/p17-101.htm#en_us_publink100094864
Generally, to claim the tuition and fees deduction for qualified education expenses for a dependent, you must:
- Have paid the expenses, and
- Claim an exemption for the student as a dependent.
Table 19-3 summarizes who can claim the deduction.
The maximum tuition and fees deduction in 2008 is $4,000, $2,000, or $0, depending on the amount of your MAGI. For details on figuring your MAGI, see chapter 6 of Publication 970.taxmap/pub17/p17-101.htm#en_us_publink100094866
Figure the deduction using Form 8917.
To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by February 2, 2009.
To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917.
|Table 19-3.||Who Can Claim a Dependent's Expenses|
| ||Do not rely on this table alone. See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970.|
|IF your dependent is an eligible student and you...||AND...||THEN...|
|claim an exemption for your dependent ||you paid all qualified education expenses for your dependent ||only you can deduct the qualified education expenses that you paid. Your dependent cannot take a deduction. |
|claim an exemption for your dependent ||your dependent paid all qualified education expenses ||no one is allowed to take a deduction. |
|do not claim an exemption for your dependent, but are eligible to ||you paid all qualified education expenses ||no one is allowed to take a deduction. |
|do not claim an exemption for your dependent, but are eligible to ||your dependent paid all qualified education expenses ||no one is allowed to take a deduction. |
|are not eligible to claim an exemption for your dependent ||you paid all qualified education expenses ||only your dependent can deduct the amount you paid. The amount you paid is treated as a gift to your dependent. |
|are not eligible to claim an exemption for your dependent ||your dependent paid all qualified education expenses ||only your dependent can take a deduction. |