Going to school isn't cheap, but the Internal Revenue Service does offer an income tax deduction for higher education tuition. The deduction is technically an "adjustment to income," which means you can claim the tax break without itemizing your deductions. The maximum you can deduct depends on your income for the year.
As of the 2014 tax year, the maximum write-off was $4,000 of qualifying tuition expenses. If your modified adjusted gross income exceeds $65,000 and you're single, or $130,000 and you're married filing jointly, your maximum deduction is cut to $2,000. To figure your modified adjusted gross income for the tuition and fees deduction, start with your adjusted gross income. You can find your AGI on line 21 of Form 1040A or line 37 of Form 1040. Add to that any exclusions of foreign earned income, the foreign housing deduction or exclusion, and any income excluded as a resident of Puerto Rico or American Samoa.
Qualifying Tuition Expenses
To qualify for the deduction, you must pay the tuition for yourself, your spouse or a dependent you claim an exemption for on your tax return. The school must be a post-secondary institution qualified to receive federal financial student aid. Only tuition and required fees count as qualified expenses. Other expenses, such as room and board, additional study materials that aren't required by the school, and travel costs do not qualify.
Tuition and Fees Deduction Eligibility
Even if you have qualifying tuition costs, you must still meet a few additional criteria to claim the deduction. The student must be enrolled in at least one course. As of 2014, you can't claim the deduction if your income exceeds $160,000 if you file a joint return or $80,000 if you use any other filing status except married filing separately. If you use that status, neither you nor your spouse is allowed to claim the deduction regardless of income. In addition, the tuition must be for classes that start in the year the tuition is paid or within the first three months of the following year. For example, if you pay tuition in December 2015 for classes starting in January 2016, you claim the deduction on your 2015 tax return.
Education Tax Credit Alternatives
Your tuition payments might also qualify for an education tax credit, such as the American Opportunity Credit or the Lifetime Learning Credit. However, if you claim either, you can't also claim the tuition and fees deduction even if you have enough expenses to do so. According to the Internal Revenue Service, if you're eligible to claim multiple education tax benefits, you can choose the one that results in the lowest tax bill for you.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."