Learn About the Tuition and Fees Deduction
The Bipartisan Budget Act of 2018 Reinstates This Deduction
The U.S. tax code isn't an unchanging set of rules that you can confidently carry forward from year to year. Today's tax deductions can become next year's wishful thinking in the blink of a congressional eye. Some deductions teeter on a figurative tightrope from year to year as taxpayers wait to find out if Congress will renew them or they'll expire.
It's been that way with the tuition and fees deduction.
It's an Above the Line Deduction
Taxpayers were able to claim a tax deduction for the cost of college tuition and other education-related fees and expenses for their spouses, their dependents, and themselves through the end of 2016. This tuition and fees deduction was an adjustment to income that could be taken directly on the first page of Form 1040 or the shorter Form 1040A.
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 or 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.
It Was Supposed to Expire at the End of 2016
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 November and December and finally signed into law on December 22, 2017. The Internal Revenue Service 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. This time the tuition and fees deduction was saved, at least for one more year. The BBA retroactively renewed it for tax year 2017 so it didn't die at the end of 2016 after all.
Where Does This Leave Tuition-Paying Taxpayers Now?
You can still claim this deduction for tuition and educational fees you paid in 2017 if you qualify. Complete Form 8917 and enter the resulting number on line 34 of your Form 1040 or line 19 of Form 1040A.
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 or by a taxpayer who can be claimed as someone else's dependent.
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 the cost of courses that are not required to achieve a degree. Schools report your qualifying expenses to you and to the IRS on Form 1098-T.
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:
- $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 ($160,000 for joint filers)
- No deduction for income over $80,000 ($160,000 for joint filers)
You can deduct tuition and other required fees for the tax year in which you paid them and for classes starting in the first three months of the year to follow.
The Tuition and Fees Deduction vs. Education Tax Credits
You can't claim both the tuition and fees deduction and an education tax credit in the same tax year, so you might want to prepare your return both ways to see which is most advantageous for you. And it might be easier to claim this deduction rather than one of the credits depending on your personal situation.
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 because it hadn't yet been renewed or you weren't aware it had been reinstated, you can file an amended return. You can amend your 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.