Can I Deduct a Continuing Fee for College on a Tax Return?
You get several ways to deduct college costs on your taxes, but it's unlikely you can write off all your expenses. You can take off costs for yourself, your spouse and your dependents, but only if they're for a college or other post-secondary school that qualifies for federal student aid. Fortunately, almost all accredited schools qualify. All education tax credits and deductions let you deduct at least some tuition, but it's harder to deduct fees.
The American opportunity tax credit lets you write off up to $2,500 against your tax bill per qualifying student. Students have to be seeking a degree and enrolled at least half-time. College fees count toward your expenses if they're mandatory. A science major paying a fee for lab time would count, for instance, because lab work is a required part of the degree program. Student activity fees would count if the university requires them, but just paying a fee to join a campus club wouldn't cut it.
The lifetime learning credit gets you as much as a $2,000 tax cut. Whereas the American opportunity can only be used for four years of undergraduate education, the lifetime learning credit, as the name says, can be taken as long as your student is enrolled and attending college, grad school or job training. As with the American opportunity credit, you only get a fee write-off if the college makes fees a condition of enrolling. Students don't have to be in a degree program, and they can be enrolled for as little as one course.
You can cut your taxable income by writing off up to $4,000 in college costs against your earnings. Once again, fees are only a valid deduction if the student has to pay them to attend the school. You take the write-off in the year you write the check, even if you don't start school until next year. Students only have to be enrolled in a single course to qualify for the deduction. However, it's $4,000 total for your family, not $4,000 per student.
Even if your college expenses qualify for a tax break, you may not. All three education write-offs have high income limits on who can claim them. You also can't take them if you're married and filing a separate return. There's also an absolute prohibition on double-dipping -- claiming the same fee as a tax deduction and a tax credit, for instance. If you take a deduction for business-related education, you can't also write it off as a tuition deduction.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.