The Tuition and Fees Tax Deduction—Its Status and How to Qualify
The Bipartisan Budget Act of 2018 Reinstated This Deduction Through 2017
The federal above-the-line tuition and fees deduction allows you to subtract the cost of college tuition and other education-related fees and expenses from your taxable income if they're paid for your spouse, your dependents, or yourself. You can claim it for the 2017 tax year if you qualify and want to go back and amend your return or if you haven't filed for that year yet, but it unfortunately expired on January 1, 2018...at least as of January 2019.
This deduction has expired and come back before, and you can still claim it for tuition and educational fees you paid in 2017 or earlier if you qualify.
It's an Above-the-Line Deduction
This deduction was an adjustment to income, sometimes referred to as "above-the-line" because it could be taken directly on the first page of the old Form 1040 that was used in the 2018 filing season for 2017 returns. You could also claim it on the shorter Form 1040A, but that's no longer available as of the 2018 tax year, either.
The IRS and the Department of the Treasury radically updated Form 1040 as of tax year 2018.
These "above-the-line" deductions are particularly advantageous because you don't have to itemize to claim them. They also help to determine your adjusted gross income (AGI). That's important because several other tax breaks depend on your AGI. They're phased out or even eliminated entirely if your AGI is too high.
The deduction is available to taxpayers who paid tuition and other required fees for attending college or another post-secondary school. Parents can deduct tuition for their child as long as the student was their dependent.
The deduction can't be claimed by married couples who file separate tax returns, by taxpayers who can be claimed as someone else's dependent, or by nonresident aliens who have not elected to be taxed as resident aliens.
Expenses for courses related to sports, games, and hobbies are not deductible, even if they're required by the school, nor are fees for room and board, insurance, transportation, or courses that are not required to achieve a degree.
The maximum amount you can claim for the tuition and fees deduction is $4,000 per year. The deduction is further limited by the following income ranges based on modified adjusted gross incomes. The 2017 thresholds were:
- $4,000 maximum for income up to $65,000 ($130,000 for joint filers)
- $2,000 maximum for income over $65,000 and up to $80,000 ($130,000 and up to160,000 for joint filers)
- No deduction for income over $80,000 ($160,000 for joint filers)
Claiming the Deduction
You should receive Form 1098-T from the education institution. The amount you paid will appear in Box 1, while the amount that the school actually billed you appears in Box 2.
This is an important distinction. You must use the amount that appears in Box 1—what you actually paid. It can be different from the number that appears in Box 2, because you can pay in advance for expenses incurred in the first three months of the next calendar year, claiming these as well.
You might have paid spring 2018 tuition in December 2017, qualifying for the tuition and fees deduction while it was still in effect in 2017.
Enter the information on IRS Form 8917 and on your 1040. Submit Form 8917 with your tax return.
Schools report your qualifying expenses to you and to the IRS on Form 1098-T.
Current Status of the Tuition and Fees Deduction
The tuition and fees deduction was scheduled to "sunset" or expire at the end of 2016 unless Congress acted to breathe new life into it, and Congress did not—at least not right away.
First, there was the Tax Cuts and Jobs Act, which was debated in Congress in late 2017 and finally signed into law on December 22 of that year. The IRS thought this legislation might extend the tuition and fees deduction, and it left a line available for it on early versions of the 2017 Form 1040 just in case. But it didn't happen.
Then Congress went back to the drawing board after the first of the year to iron out the Bipartisan Budget Act of 2018 (BBA). This time the tuition and fees deduction was saved, at least for one more year. The BBA retroactively renewed it for the 2017 tax year, so it didn't die at the end of 2016 after all.
It hasn't yet been renewed for the 2018 or 2019 tax years.
The Tuition and Fees Deduction Versus Education Tax Credits
You can't claim both the tuition and fees deduction and either of the education tax credits in the same tax year, so you might want to prepare your return both ways to see which is most advantageous for you. Many taxpayers claim the tuition and fees deduction because they can't claim either of the credits due to income and enrollment restrictions.
One of the greatest advantages of the tuition and fees deduction is that it isn't subject to some of the exacting rules that the education-related tax credits are. It's not restricted based on what year of college you or your dependent are attending, and it doesn't depend upon whether you're a part-time or a full-time student. Taking even one class could qualify you for this deduction.
Filing an Amended Return
If you've already filed your 2017 tax return and didn't claim the tuition and fees deduction, you can file an amended return up to three years after you filed your original return or two years after you paid the tax due for that year, whichever is later.
IRS. "Adjustments to Income." Accessed Dec. 30, 2019.
IRS. "Tax Benefits for Education: Information Center." Accessed Dec. 30, 2019.
FinAid. "Education and Tax Benefits, Tuition and Fees Deduction." Accessed Dec. 30, 2019.
IRS. "About Form 1040-A, U.S. Individual Income Tax Return." Accessed Dec. 30, 2019.
IRS. "Questions and Answers About the 2018 Form 1040." Accessed Dec. 30, 2019.
IRS. "Instructions for Forms 1098-E and 1098-T (2020)." Accessed Dec. 30, 2019.
IRS. "2020 Form 1098-T," Page 3. Accessed Dec. 30, 2019.
IRS. "About Form 8917, Tuition and Fees Deduction." Accessed Dec. 30, 2019.
The White House. "Remarks by President Trump at Signing of H.R. 1, Tax Cuts and Jobs Bill Act, and H.R. 1370." Accessed Dec. 30, 2019.
IRS. "2018 Form 8917." Accessed Dec. 30, 2019.
IRS. "Extended and Expired Legislation." Accessed Dec. 30, 2019.
IRS. "American Opportunity Tax Credit: Questions and Answers." Accessed Dec. 30, 2019.
IRS. "Amended Returns & Form 1040X." Accessed Dec. 30, 2019.