What Educational Expenses Are Tax Deductible?

You cannot deduct an expense and also take it as a tax credit.

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Higher education can be a great investment for your future, but it can be quite expensive up-front. However, your costs could entitle you to an income tax deduction to ease your financial pain while you’re in school. But, before you rush to claim the tuition and fees deduction, make sure you aren’t eligible for a larger tax credit for your education costs.

Tip

Only qualified higher education expenses, like tuition and fees, can be deducted on your taxes.

Tuition and Fees Deductions Qualification

The tuition and fees deduction allows you to write off qualified education expenses that you pay for yourself, your spouse or your dependent. Qualified education expenses include tuition and fees that are required for you to attend school. For example, it would include a student activity fee that all students have to pay to enroll in the school, but it wouldn’t include optional fees like participating in student clubs. In addition, room and board is excluded from deductible education expenses.

Tuition and Fees Deduction Restrictions

The tax code doesn’t allow you to claim the tax deduction if your filing status is married filing separately or if someone else can claim you as their dependent. Plus, if your income is too high, your deduction could be reduced or eliminated.

In addition, the tuition and fees deduction is only one of several income education tax deductions for higher education expenses. Other breaks include the American Opportunity Credit and the Lifetime Learning Credit, which are often more lucrative tax breaks than the tuition and fees deduction. However, you’re limited to one tax break for your expenses each year. So, if claiming either of the other credits will save you more money on your taxes, you aren’t eligible to claim the tuition and fees deduction.

Deduction Eliminated for 2018

The tuition and fees deduction has not been extended to the 2018 tax year, so unless the federal government passes a new law, you won’t be able to deduct these expenses in 2018 and beyond. However, an extension may be passed at the last moment so the deduction might still apply. In addition, there are other tax deductions you could be eligible to claim, like the American Opportunity Credit or the Lifetime Learning Credit that might save you more money anyway.

Claiming the Deduction in 2017

The tuition and fees deduction wasn’t extended for the 2017 tax year until the Bipartisan Budget Act took effect Feb. 9, 2018. So, the deduction is still available for the 2017 tax year. If you filed your taxes prior to that date and wanted to claim the deduction, you can file an amended tax return. However, it takes an average of 16 weeks for the IRS to process your amended return.

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About the Author

Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."


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