The tax code allows you to take a tax deduction for tuition expenses only in certain circumstances. In general, only tuition that you pay for members of your immediate family is eligible for the deduction -- and then only for higher education. The amount you can deduct each year is also capped.
You can deduct from your taxable income the tuition that you pay for yourself, your spouse or your dependent children. For you to be able to deduct tuition paid for any other relatives, those relatives must also be your dependents, and you must claim an exemption for them on your tax return.
Only higher education costs are deductible under the tuition deduction. Higher education includes any college, university, vocational school or other educational program whose students are eligible for federal student financial aid programs. Elementary and secondary school tuition isn't eligible. You can deduct tuition and any fees that are mandatory for all students attending the school. Books, room, board and other expenses aren't eligible. The student has to be enrolled in at least one course in any period for which you claim a deduction.
How Much You Can Deduct
As of 2012, you can deduct a maximum of $4,000 in tuition and fees. That figure is a cumulative total that applies to tuition you paid for everyone -- you, your spouse and all eligible relatives. It's not a per-person figure. Higher-income taxpayers also aren't eligible for the deduction. As of 2012, single taxpayers could take the deduction if their modified federal adjusted gross income was $80,000 or less. The cutoff for married taxpayers filing jointly was $160,000. Married people filing separate returns could not claim the deduction.
Taking the Deduction
The tuition and fees deduction is an "above the line" deduction, meaning you can take it even if you don't itemize your tax deductions. Claim it in the "Adjusted Gross Income" section of your tax return, either Internal Revenue Service Form 1040 or the short-form 1040A. You must also fill out IRS Form 8917 and attach it to your return.
As an alternative to taking a deduction for tuition, you may be eligible for one of two federal tax credits for education, the American Opportunity Tax Credit or the Lifetime Learning Credit. Unlike the tuition deduction, which reduces the amount of your income on which you must pay taxes, these tax credits reduce your tax bill directly. You can't take both credits, nor can you take the tuition deduction and one of the credits. Rules for the credits are spelled out in IRS Publication 970.
Cam Merritt is a writer and editor specializing in business, personal finance and home design. He has contributed to USA Today, The Des Moines Register and Better Homes and Gardens"publications. Merritt has a journalism degree from Drake University and is pursuing an MBA from the University of Iowa.