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The federal tax code allows you to write off up to $4,000 from your taxable income for certain college education expenses you paid in the current tax year for yourself, your spouse or a dependent child. It doesn’t matter whether it’s you, your spouse or your child attending the college or university; the tax break works the same way. But your income affects how much education expense you can deduct.
You can take a deduction for tuition and related fees that you paid to a college, university, technical/vocational school or other post-secondary institution eligible to participate in federal student aid programs. Payment of the tuition and fees must be a mandatory condition for enrollment and they must be paid to the college. You can’t deduct expenses for textbooks, room and board, insurance, transportation or general living expenses. You also can’t deduct expenses for sports participation or noncredit courses unless they are a mandatory part of the student’s degree program.
To get the education tax deduction, you must file as single or married filing jointly, and you can’t be claimed as a dependent by another taxpayer. Those who are married filing separately don’t qualify. If you are claiming an education deduction for your child, the child must be claimed on your taxes as a dependent. As of 2011, if you earned more than $80,000 if single or $160,000 if married filing jointly, you are ineligible to take the education deduction.
You can’t deduct college expenses covered by some other tax deduction or tax-exempt education assistance program. For instance, you can’t take the education deduction for college expenses you already deducted as a business expense. You can’t deduct expenses for a student who claims an American Opportunity or Lifetime Learning tax credit or deduct expenses paid with tax-exempt education assistance funds from scholarships, grants, Cloverdell education savings programs, Savings Bond redemptions or any other source.
You take the education deduction as an adjustment to income before taking any other deductions. That means you get the education expense tax break even if you don’t itemize deductions on Schedule A. The amount you can take depends on your income. As of 2011, if you are single earning less than $65,000 or married filing jointly and earning less than $130,000, you can deduct up to $4,000 in education expenses. Your maximum deduction is cut in half, to $2,000, if you were single and earned between $65,000 and $80,000 or if you were married filing jointly and earned between $130,000 and $160,000. These deduction maximums are for all the students in your family collectively, not for each student individually.
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