yourself, your spouse, or your dependent for whom
you claim an exemption on your tax return. Please note that you cannot
claim the tuition and fees deduction if your modified adjusted gross income
(MAGI) is more than $80,000 ($160,000 if filing a joint return). Also, you
cannot claim the tuition and fees deduction if you were a nonresident alien
for any part of the year and did not elect to be treated as a resident alien
for tax purposes. Additionally, if you or anyone else claims an education
credit for expenses of the student for whom the qualified education expenses
were paid, then you cannot recycle these expenses for the tuition and fees
deduction. Another person can claim an exemption for you as a dependent on
his or her tax return. If this is so, youcannot
take the tuition and fees deduction even if the other person does not
actually claim that exemption.
There is a special deduction allowed for paying
interest on a student loan (also known as an education loan)
used for higher education. This deduction is a student loan
interest deduction for interest you paid during the year on a qualified
student loan.For most taxpayers, MAGI is the adjusted gross
income as figured on their federal income tax return before
subtracting any deduction for student loan interest. This
deduction can reduce the amount of your income subject to tax by
up to $2,500. You can claim the student loan interest deduction
even if you do not itemize deductions on your Form 1040's Schedule A.
A qualified student loan is a loan you took out
solely to pay qualified education expenses that were for you,
your spouse, or a person who was your dependent when you took out the loan.
These education expenses were paid or incurred within a reasonable period of
time before or after you took out the loan. Furthermore, the expenses were
for education provided during an academic period for an eligible student. Loans solely to pay qualified
education expenses that you took out from certain sources are
not considered qualified
student loans. For examples, loans from related persons, from a
qualified employer plan or a corporation where you are a majority stock
holder, are not permitted. For purposes of the student loan interest
deduction, these expenses are the total costs of attending an
eligible educational institution, including graduate school.
Such expenses include tuition and fees, room and board, books,
supplies, equipment and other expenses such as the cost of transportation.
The cost of room and board qualifies for the
student loan interest deduction only to the extent that it is
not more than the greater of a) the allowance for room and board as
determined by the eligible institution, which was included in the cost of
attendance (as stipulated by federal financial aid) for a particular
academic period and living arrangements of the student or b) the actual
amount charged if the student is residing in housing owned or operated by
the eligible educational institution.
If you are an employee and can itemize your
deductions, you may be able to claim a deduction for the
expenses you pay for your work-related education. Additionally,
your work-related education expenses may also qualify you for other tax
benefits, such as the tuition and fees deduction and the lifetime learning
credit.To claim a business deduction for work-related
education, you must be working and must itemize your deductions
on Schedule A of Form 1040 if you are an employee. However, if you are a
self-employed individual, you would file Schedule C (Form 1040), Schedule C-EZ
or Schedule F if you are a farmer or fisherman. To claim the credit, you
must also have expenses for education that meet the requirements for
qualifying work-related education.
