Colleges and universities typically require prospective students to apply for admission, and they may require the application to be accompanied by an application fee. Internal Revenue Service (IRS) regulations allow taxpayers to defray some of those costs by deducting college application fees on their federal income tax returns.
You may be eligible to deduct certain expenses related to obtaining a college education, including required college application fees, that you paid for yourself, your spouse or your dependents. You may be eligible for this deduction if you file your taxes as single, married filing jointly, head of household, or qualifying widow(er). You are not eligible to take this deduction if you file as married filing separately. You are not eligible to take this deduction if you can be claimed as a dependent on another taxpayer's income tax return, even it that person does not claim you as an exemption.
Eligible taxpayers may deduct qualified education expenses that were actually paid during the tax year, even if the funds used to pay those expenses were borrowed funds. To qualify for deduction, the college application fee must be paid to a qualified educational institution as a condition of enrollment or attendance.
Any vocational school, technical institute, college, university or other post-secondary educational institution that is eligible to participate in any student aid program offered by the U.S. Department of Education qualifies as an eligible institution for tax deductions. The IRS notes that this includes almost all accredited post-secondary public and private educational institutions. The IRS advises taxpayers who have a question regarding a specific institution's eligibility to ask the institution.
The maximum income deduction you can take for educational fees and expenses was $4,000 as of the 2,010 tax year. The amount of the deduction may be limited for single taxpayers with a modified adjusted gross income of $80,000, or for married taxpayers filing a joint return who have a modified adjusted gross income of $160,000. The deduction is taken as an adjustment to income and may be taken whither you itemize your deductions or claim the standard deduction. You cannot take a deduction for educational expenses that you paid for with tax-free money, such as a Pell Grant or interest from a U.S. savings bond.
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