Understanding the Tuition and Fees Deduction

One of the tax provisions that was set to expire in 2010 but was extended to include 2011 is the Tuition and Fees Deduction.

The Tax Benefit

Eligible taxpayers may deduct up to $4,000 of qualified education expenses for eligible students. This benefit must be evaluated along with other educational tax benefits such as the American Opportunity Credit and the Lifetime Learning Credit.

What is the benefit?

  • Up to $4,000 if: Married Filing Joint (MFJ) and your modified Adjusted Gross Income (AGI) is less than $130,000 ($65,000 if Single)
  • Up to $2,000 if: MFJ and your modified AGI is between $130,000 – $160,000 ($65,000-$80,000 if Single)

Who/What is not eligible?

  • Clients that can be claimed as a dependent on someone else’s return
  • Filing status of married filing separately
  • Personal expenses including room and board
  • Double benefits are not allowed. In other words, if you use the same expense to qualify for another education tax benefit, it will not qualify.

Navigating the maze of education tax benefits can be complicated and often requires running through different scenarios. Feel free to call if you wish a review of your situation.