The Tuition and Fees Tax Deduction—Its Status and How to Qualify

This deduction has been reinstated through 2020

Group of friends looking at a diploma
•••

 SDI Productions / Getty Images

The federal tuition and fees deduction allows you to subtract the cost of college tuition and other education-related fees and expenses from your taxable income "above the line." You can claim this expense and itemize or claim the standard deduction as well. Along with any other of these adjustments to income you qualify for, they determine your all-important adjusted gross income (AGI).

And, yes, the tuition and fees deduction is back in 2020.

The On-Again-Off-Again History

The tuition and fees deduction has historically been one of those on-again-off-again adjustments to income that's expired in prior years only to be resurrected by Congress later.

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, so it left a line available for it on early versions of the 2017 Form 1040 just in case. But it didn't happen. The tuition and fees tax break expired.

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 lived on until the end of 2017 when it expired again.

Finally, the Taxpayer Certainty and Disaster Relief Act of 2019 reinstated the deduction retroactively to 2018. You can claim it in 2018, 2019, and 2020. It's set to expire again at the end of 2020.

It's an Above-the-Line Deduction 

This adjustment to income deduction is sometimes referred to as "above the line" because it could be taken on the first page of the old Form 1040 that was used in 2018. You could also claim it on the shorter Form 1040A, but that tax return was eliminated as of the 2018 tax year when the IRS and the Department of the Treasury radically updated Form 1040.

The IRS and the Treasury Department did the same for the 2019 tax year, revising Form 1040 yet again. This version is the return you'll file in 2020.

The tuition and fees adjustment to income is claimed on line 21 of the 2019 Schedule 1, "Additional Income and Adjustments to Income." Your total adjustments to income appear on line 22 of the schedule, and that number is then transferred to line 8a of the 2019 Form 1040. And line 8a is still technically "above the line" because it determines your AGI.

These adjustments to income are particularly advantageous because you don't have to itemize to claim them. You can claim them and itemize as well, or you can claim them and also claim the standard deduction for your filing status. Adjustments to income determine your AGI, and that's important because several other tax breaks depend on your AGI. They're phased out or even eliminated if your AGI is too high.

Qualifying Rules for the Deduction

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, or for their spouses.

The tuition and fees adjustment to income 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 aren't deductible, even if they're required by the school. Nor are fees for room and board, insurance, transportation, or courses that aren't required to achieve a degree.

The maximum amount you can claim for the tuition and fees adjustment to income is $4,000 per year. The deduction is further limited by income ranges based on your modified adjusted gross incomes (MAGIs). The 2020 thresholds are:

  • $4,000 maximum for income up to $65,000 for single, head of household, and qualifying widow(er) filers, and up to $130,000 for joint filers
  • $2,000 maximum for income over $65,000 up to $80,000 for single, head of household, and qualifying widow(er) filers. From $130,000 up to $160,000 for joint filers
  • There's no deduction available for incomes over $80,000 for single, head of household, and qualifying widow(er) filers or $160,000 for joint filers

Most taxpayers will find that their MAGIs are the same as their AGIs. Your AGI appears on line 8b of the 2019 Form 1040. It appears on line 7 of the 2018 Form 1040.

​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 difference 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 might pay in advance for expenses incurred in the first three months of the next calendar year. You can claim these as well.

Enter the information on IRS Form 8917 and on your Form 1040. Submit Form 8917 with your tax return.

Schools also report your qualifying expenses to the IRS on Form 1098-T. 

The Deduction vs. Education Tax Credits

You can't claim both the tuition and fees deduction and either of the education tax credits—the American Opportunity Credit or the Lifetime Learning Credit—in the same tax year. Many taxpayers claim the tuition and fees adjustment to income because they can't claim either of the credits due to income restrictions.

You might want to prepare your return both ways to see which is most advantageous for you.

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.

Filing an Amended Return

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 if you want to go back and claim this deduction for the 2018 or 2019 tax years since it's been retroactively renewed.

Article Sources

  1. IRS. "Extended and Expired Legislation." Accessed June 11, 2020.

  2. IRS. "Tax Benefits for Education: Information Center." Accessed June 11, 2020.

  3. USA.gov. "Tax Law Changes." Accessed June 11, 2020.

  4. IRS. "Publication 970 (2019), Tax Benefits for Education." Accessed June 11, 2020.

  5. IRS. "Questions and Answers About the 2018 Form 1040." Accessed June 11, 2020.

  6. IRS. "Frequently Asked Questions / Amended Returns & Form 1040X." Accessed June 12, 2020.