Student Tax Deductions for College Education - Tuition and Fees, Student Loan Interest
There are two special tax deductions available to help you pay your education expenses: the Tuition and Fees Deduction and the Student Loan Interest Deduction.
If you claim an education tax credit, you cannot claim the Tuition and Fees Deduction, but you may still claim the Student Loan Interest Deduction.
Student Loan Interest Deduction
If you have started to pay back your student loans, you may be able to reduce your taxable income by up to $2,500 of the student loan interest you have paid for you, your spouse, or your dependent. This also includes the one-time "loan origination fee" charged by your lender.
The Student Loan Interest Deduction is an "above-the-line" deduction, which means that you do not need to itemize deductions in order to claim it.
Do I Qualify for the Student Loan Interest Deduction?
To qualify for the deduction, the student loan on which you paid interest must be a commercial loan taken out exclusively for the purposes of paying for education. The loan may only apply to a student who is enrolled at least half-time in a degree program. The student must be you, your spouse, or your dependent.
In 2013, the amount of your deduction will begin to decrease, or phaseout, at an adjusted gross income of $60,000 ($120,000 if married filing jointly) and the deduction will be unavailable to you if your AGI is $75,000 ($150,000 if married filing jointly) or higher.
Tuition and Fees Deduction
You may be able to claim a tax deduction of up to $4,000 for qualifying tuition and fees you paid for you, your spouse, or a dependent. You may deduct any qualified expenses up to $4,000, even if you paid the tuition and fees with a loan. If you take the Tuition and Fees Deduction and you have also paid interest on student loans, you may be able to take the Student Loan Interest Deduction as well.
The Tuition and Fees Deduction is an above-the-line deduction, so you do not need to itemize to claim it on your tax return.
Do I Qualify for the Tuition and Fees Deduction?
To qualify, the student for whom you paid tuition and fees must be you, your spouse, or your dependent. The student need only be enrolled part-time.
You will NOT qualify for the Tuition and Fees Deduction if any of the following are true:
- Your filing status is married filing separately
- You may be claimed as a dependent on another tax return (whether or not you are actually claimed)
- You are claiming either the Lifetime Learning Credit or The American Opportunity Credit
- The tuition was paid in pursuit of a doctoral degree (a PHD)
- Your adjusted gross income is higher than $80,000 ($160,000 if married filing jointly)
- You were a nonresident alien for any part of the Tax Year and did not elect to be treated as a resident alien for tax purposes.
For 2013, the value of the Tuition and Fees Deduction begins phasing out at AGIs of $65,000 ($130,000 if married filing jointly). If your adjusted gross income is $65,000 or less ($130,000 or less if married filing jointly), then you will qualify for the full $4,000 deduction. If your AGI is from $65,001 to $80,000 ($130,001 to $160,000 if married filing jointly), the maximum amount of your Tuition and Fees Deduction will be reduced. If your AGI is above $80,000/$160,000, the deduction will not be available to you.
Related Student Tax Topics:
See an overview of student tax breaks.
Learn about valuable student tax credits.
Find out how to save money with tax-free student savings accounts.
Read about common student tax myths as well as helpful beginner tax tips.
Learn about other tax deductions for which you may qualify.
Use our Free Tax Tools to help calculate taxes or determine elegibility for certain credits.