College Education and Tax Deductions
If you attend any accredited K-12 school, university, community college, trade or vocational school, or adult/continuing education class, then generally you will qualify for some or all of the education tax credits or deductions. The degree you are pursuing should not matter whether you qualify or not (e.g. Bachelor's Degree, a Master's Degree, a certificate, or even a PhD, for your post-secondary educational institution).
If you claim a student as a dependent on your tax return, note that you can claim only one type of education credit per student dependent on your federal tax return each Tax Year. If more than one student dependent qualifies for a credit in the same year, you can claim a different credit for each student.
To figure the total tax credit or tax deduction amount for an eligible student, you may be able to include qualified expenses, such as tuition, fees, and other related expenses (books, supplies, equipment, and other required course materials, but not room and board). In addition, these credits are subject to income limitations, so your amount may be reduced or eliminated based on your adjusted gross income. When you prepare your return on eFile.com, all you need to do enter the education expenses, and we will prepare the forms needed to claim either the education deduction or credit on your tax return.
Important: Previously the Tuition and Fees Deduction had expired with 2017 returns and thus could not be used on your 2018 tax return. However see this UPDATE - In late 2019, the Tuition and Fees Tax Deduction was brought back by Congress for Tax Years 2018, 2019, and 2020. The eFile.com Tax App makes it easy for you to claim this tax deduction. To claim the deduction on your 2018 return, you will need to file an amendment.
The Student Loan Interest deduction is still in effect, plus the American Opportunity Tax Credit and Lifetime Learning Credit.
Qualified Expenses for Student Tax Deductions/Credits For Tax Year 2019
Tuition and fees
Books and Supplies
Computers and related equipment and services (i.e. internet)
Student loan interest payments
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. Above the line deductions reduce your taxable income and ultimately lowers your adjusted gross income. 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.
Student Loan Interest Phaseout Adjusted Gross Incomes: In 2019, the deduction will be unavailable to you if your modified AGI is higher than $85,000 for Single, Head of Household, and Qualifying Widower filers and $170,000 if Married Filing Jointly.
Qualified expenses for the Student Loan Interest Deduction are the total costs of attending an eligible educational institution (including graduate school). An eligible educational institution is a school offering higher education beyond high school. It is any college, university, trade school, or other post secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education. This includes most accredited public, nonprofit and privately-owned–for-profit postsecondary institutions. If you are not sure if your school qualifies, you can ask or see if your school is listed here.
These costs include:
- Tuition and fees
- Books, equipment, and supplies
- Room and board
- Other necessary expenses, such as transportation
Room and board costs only qualify for the deduction if they are not more than the greater of:
- The allowance for room and board (as determined by the eligible educational institution) that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, OR
- The actual amount charged if the student is residing in housing owned or operated by the educational institution
Tuition and Fees Deduction
Important: Previously, the Tuition and Fees Deduction had expired with 2017 returns and thus could not be used on your 2018 Tax Return. However, see this UPDATE - In late 2019, the Tuition and FeesTax Deduction was brought back by Congress for Tax Years 2018, 2019, and 2020. The eFile.com Tax App makes it easy for you to claim this tax deduction. If you need to claim the deduction on your 2018 return, you will need to file an amendment.
Simply start a tax return on eFile.com and you will be guided through on how to claim the Student Tuition Deduction. Most Students qualify for the Free Federal Edition on eFile.com.
For your 2017 and earlier returns - plus for Tax Years 2018, 2019, and 2020, you can claim a tax deduction of up to $4,000 for $2,000 depending on your Modified Adjusted Gross Income (MAGI) and filing status (the Married Filing Separate status does not qualify) for qualifying tuition and fees you paid for you, your spouse, or a dependent. You can 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.
Here's how much the student tuition deduction could be worth:
$4,000, if your Modified Adjusted Gross Income or MAGI was under $60,000 with the filing status single or under $130,000 for married filing jointly couples.
$2,000 for single filers with a MAGI between $60,000 and $80,000. For the married filing jointly filing status with a MAGI between $130,000 and $160,000.
$0 tax deduction for single files with a MAGI over $80,000 or over $160,000 for married filing jointly couples.
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:
For 2019, the value of the Tuition and Fees Deduction began to phase out at AGIs of $60,000 ($130,000 if married filing jointly). If your adjusted gross income is $60,000 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 $60,001 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.
How Else Can Students Save Money on Taxes?
Besides claiming tax credits (which reduce the amount of income tax you owe) and tax deductions (which reduce the amount of your income that is taxable), there are two other major ways students can save money on taxes:
- Exclusions: Tax exclusions are parts of your income that do not have to be included in your gross income on your tax return. The most relevant forms of non-taxable income for students are scholarship funds and fellowship grants. Learn more about excluding scholarship and grant income.
- Savings Plans: There are two special kinds of savings accounts which provide great tax benefits to students: Coverdell Educational Savings Accounts (Coverdell ESA's) and Qualified Tuition Programs, which are also known as 529 College Savings Plans.
- Financial Aid: When applying for financial aid, your college or university may ask you to provide old tax tax returns--either yours or your parents. To access an old tax return, you might need to obtain a copy or free transcript of a tax return from the IRS. A transcript of your tax return provides W-2 information along with the basic information that was filed with the tax return, including marital status, adjusted gross income, taxable income, and most line items from the tax return. The tax return transcript can be sent directly to the institution asking for it.
College Student Tax Credits for Tax Year 2019
Education Savings Plans for College and K-12 Students
Related Student Tax Topics
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