Can I Claim Tuition & Interest Deductions if My Child Claims Themselves?

If you improperly claim tax deductions and credits, you'll find yourself in hot water with the IRS.

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There’s no question that the cost of higher education is a major expense for many families. To help with the cost, qualified taxpayers have traditionally been able to take advantage of tuition and interest deductions. The deductions lower the amount of tax owed by a taxpayer, and may result in a refund.

Tuition and Fees Deduction for 2017

You can deduct the cost of “qualified education expenses,” which is the amount you paid for courses taken by you, your spouse or a dependent, including a dependent child. Taxpayers are eligible to deduct education expenses, such as tuition and enrollment fees. Other allowable expenses are books, equipment, supplies and activity fees.

Another option is to take the tuition and fees deduction without itemizing each expense. It can be used to lower the amount of your taxable income by up to $4,000.

This deduction has been renewed for 2017 under the Bipartisan Budget Act, which was passed in early 2018. Taxpayers who have already filed their income tax returns and did not claim this deduction can file an amended income tax return. To amend an income tax return, use Form 1040X.

How to Qualify for Educational Deductions

Unless any of the situations listed below apply, you would be eligible to deduct education expenses on your federal income tax return.

You are claiming an education credit for the same student for whom you are claiming an educational deduction. You can choose either an education credit or a deduction, but not both.

You are married, but file your income tax separately from your spouse.

Another taxpayer can claim an exemption for you on his return. The Bipartisan Budget Act has eliminated personal exemptions, starting in 2018.

Your MAGI (Modified Adjusted Gross Income) is higher than $80,000 if you are filing on your own or $160,000 if you are filing jointly.

You were a nonresident alien at any point during the year.

Student Loan Interest Deduction

Along with the tuition and fees deduction, you may also be able to deduct student loan interest on your federal income tax return. Loan interest is not usually a tax-deductible expense. If you are a homeowner, you can deduct the interest you paid on your mortgage during the year. Another exception is a situation when you pay interest on a student loan, if your MAGI is less than $80,000 for an individual filer and $160,000 if filing jointly.

To determine your MAGI, take your gross income from your federal income tax return without subtracting any amount for student loan interest. The student loan interest deduction can reduce your taxable income by as much as $2,500.

To qualify for this deduction, you must have taken out the loan to pay for qualified education expenses for yourself, your spouse or someone who was dependent on you at the time. The funds must have been used to pay for these expenses during an official academic period. The loan amount must be paid to the learning institution within a reasonable time after receipt from the lender.

Loans received from a relative or under an employer plan are not eligible for the student loan interest deduction.

To learn more about education deductions and whether you should be claiming tuition and interest deductions on your income tax return, consult a financial industry professional.

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About the Author

Jodee Redmond is a freelance writer, author, editor, blogger and award-winning Internet researcher. She is a graduate of Centennial College in Toronto who has been freelancing since 2000. Jodee has also worked as a tax consultant, in sales and was a legal assistant for a number of years.

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