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Taxmap/pubs/p970-026.htm#TXMP40b81230 Chapter 6 Tuition and Fees Deduction

Tuition and Fees Deduction

Taxmap/pubs/p970-026.htm#TXMP7f43fb7d What's New

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Maximum deduction increases to $4,000.

Beginning in 2004, the amount of qualified education expenses you may take into account in figuring your tuition and fees deduction increases from $3,000 to $4,000 if your modified adjusted gross income (MAGI) is not more than $65,000 ($130,000 if you are married filing jointly). If your MAGI is larger than $65,000 ($130,000), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum tuition and fees deduction is $2,000. No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000).

Introduction

You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or a dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education, as explained later under Qualified Education Expenses.

Taxmap/pubs/p970-026.htm#TXMP1c3b9db1 What is the tax benefit of the tuition and fees deduction.

The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.

This deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if you cannot take either the Hope or lifetime learning credit because your income is too high.

The tuition and fees deduction is available for 4 years, 2002 through 2005.

Table 6-1 summarizes the features of the tuition and fees deduction.

You may be able to take the Hope or lifetime learning credit for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax. See chapters 2 and 3 for details about the credits.

Taxmap/pubs/p970-026.htm#TXMP16b8c1ba Can You Claim the Deduction

Deduction

The following rules will help you determine if you can claim the tuition and fees deduction.

Taxmap/pubs/p970-026.htm#TXMP28aa971d Who Can Claim the Deduction

Who Can Claim the Deduction

Generally, you can claim the tuition and fees deduction if all three of the following requirements are met.

1. You pay qualified education expenses of higher education.
2. You pay the education expenses for an eligible student.
3. The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.

"Qualified education expenses" are defined on the next page under What Expenses Qualify. "Eligible students" are defined later under Who Is an Eligible Student. A "dependent for whom you claim an exemption" is defined later under Who Can Claim a Dependent's Expenses.

Taxmap/pubs/p970-026.htm#TXMP75a960af Who Cannot Claim the Deduction

Who Cannot Claim the Deduction

You cannot claim the tuition and fees deduction if any of the following apply.

• Your filing status is married filing separately.
• Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption.
• Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return).
• You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Publication 519, U.S. Tax Guide for Aliens.
• You or anyone else claims a Hope or lifetime learning credit in 2004 with respect to expenses of the student for whom the qualified education expenses were paid.

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Previous Page:  Publication 970 - Tax Benefits for Education - Student Loan Repayment Assistance Next Page:  Publication 970 - Tax Benefits for Education - What Expenses Qualify Use     to find additional instances of index items.