How to Calculate College Tuition on a Tax Return

There's a bit of uncertainty surrounding the tax deduction for college tuition and fees as we head toward tax day 2021. In 2017, the deduction technically expired. However, a new extension means that college tax deductions have been extended up through ​Dec. 31, 2020​. That means that it is possible to claim a tax deduction for 2020 when filing your taxes in 2021.

College Tax Deduction Amounts

Eligible taxpayers may deduct ​up to $4,000​ in college costs for 2020. This applies to college costs paid for you, a spouse or dependent children. Here's a look at what the IRS considers qualifying expenses:

  • Tuition
  • College fees
  • Textbooks
  • Supplies

Generally, anything that can be proven as being "required for enrollment or attendance" will qualify as a deductible expense. If you're planning to take this deduction, it's important to keep records of all expenses related to college. It's also important to know that any tax-free educational assistance provided to a student during a calendar year must be subtracted from the eligible expenses you'll be claiming. This includes things like scholarships or employer-sponsored tuition coverage.

Maximum Deduction for College Expenses

The maximum deduction for taxpayers with a modified adjusted gross income of ​$65,000​ is ​$4,000​. For married filing jointly, the income threshold is ​$130,000​. For taxpayers with gross incomes between ​$65,001 and $80,000​, the maximum deduction is ​$2,000​. The numbers move to ​$130,001 and $160,000​ for that ​$2,000​ maximum for married filing jointly.

Claiming the College Tuition Deduction

The IRS provides something called the Form 8917 to allow you to claim qualified tuition and fees paid in 2018, 2019 or 2020. This form is intended to be attached to Form 1040. If you'd like to claim a college tax deduction retroactively because you believed that this tax credit had expired without being renewed, you can use a Form 1040X.

Implications for 529 College Savings Plans

Generally, yes. The tax deduction is still in play as long as the expenses you plan to deduct were not paid using distributions from your 529 plan. You will not be eligible to claim any college tax deduction if you've used the American Opportunity Tax Credit or Lifetime Learning Tax Credit this year.

Possibility of Extension to 2021

The answer to whether the college tax deduction gets extended is uncertain as of right now. However, the tax benefit has been extended consistently since expiring in 2017. That means that there's a good chance that college expenses will be deductible in 2021. The big thing to know for now is that you are eligible for tax deductions for college tuition based on what you spent in 2020.