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Student Tax Filing Deductions

(IRS Publication 970)

Student Tuition and Fees Deduction

You can take a tax deduction for college tuition and other mandatory school fees, not include the cost of books, supplies, software, room and board, insurance, student health fees, transportation, living expenses or other miscellaneous expenses for schooling.

Qualifying expenses are reported to you and to the IRS using Form 1098-T.

Limits: The maximum amount of tuition and fees deduction you can claim increases periodically with inflation and can be found in (IRS Publication 970)

Report the tuition and fees tax deduction on Form 1040 Line 35. This line is normally to report the Domestic production activities deduction. Write a "T" on the dotted line, and enter the amount of your deduction in the box.

If you are claiming both the Domestic Production Activities Deduction (a US-based business activities deduction) and the tuition deduction, write a "B" on the dotted line, and enter the total of both deductions in the box. Attach a statement that breaks down the amounts claimed for each deduction.

Hope and Lifetime Learning Credits

You might be eligible to claim the Hope or Lifetime Learning tax credits for college expenses, which generally, will be more beneficial than claiming the Tuition and Fees Deduction. You cannot claim more than one tax benefit for the same education expenses.

Deductions Comparison

While the Tuition and Fees deduction reduces taxable income, the Hope Credit and Lifetime Learning Credit both provide a tax credit based on a percentage of your qualified college expenses. Generally, taking a tax credit will provide a greater benefit than a deduction. The education tax credits are calculated on IRS Form 8863 (PDF).

Hope Credit

The Hope Credit is a tax credit for college students in their first two years of college. It provides a tax credit of up to $1,650 on the first $2,200 of college tuition and fees. You can claim the Hope Credit on your tax return if you, your spouse, or your dependent are a first-year or second-year college student, enrolled at least half-time at an eligible education institution, and you paid college expenses.

Lifetime Learning Credit

The Lifetime Learning Credit is a tax credit for any person who takes college classes. It provides a tax credit of up to $2,000 on the first $10,000 of college tuition and fees. You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependents are enrolled at an eligible educational institution, and you paid college expenses. Unlike the Hope Credit, even if you took only one class, you can claim the Lifetime Learning Credit.

Eligible Educational Institutions

Accredited colleges and universities, Vocational Schools and other Post-secondary Institutions. If the institution is eligible to participate in federal student aid programs through the US Department of Education, then the tuition and fees paid to the school may be claimed in the Hope or Lifetime Learning Credits.

Qualifying Expenses are listed above, under Student Tuition and Fees Deduction.

You must reduce your qualifying expenses when figuring your tax credit by the amount of financial assistance received from grants, scholarships, or reimbursements from your employer.

Who Can Claim the Education Credits?

Whoever you claim legally as a dependant, in qualifying schooling, can be claimed on your tax return. Anyone not legally claimed as a dependant should claim any education credits on his or her own tax return.

Income Limitations on Education Tax Benefits see (IRS Publication 970)

No education tax break of any type is allowed for taxpayers who are married but filing separately.

Student Loan Interest Deduction

(IRS Tax Topic 456)

Your lender will send you a Form 1098-E. The amount of interest you paid on your student loans for the year will be reported on Form 1098-E, box 1.

The maximum amount of student loan interest you can claim is based on income and listed in (IRS Publication 970)

Additional conditions

  1. You paid interest on a qualified student loan in the tax year claimed
  2. Your filing status is not married filing separately
  3. You and your spouse, if filing jointly, are not claimed as dependents on someone else's return
  4. Also see Tax Benefits for Education (IRS Publication 970)

A qualified student loan is a loan you took out to pay for qualified higher education expenses. See the instructions for Form 1040 to determine if your expenses qualify.

Other forms where you may report your Claim

Report your student loan interest paid on Form 1040 Line 33 or on Form 1040A Line 18. If you file a Form 2555, Form 2555EZ or Form 4563, use Publication 970 instead of the worksheet in the Form 1040 Instructions.

For Detailed Information

(IRS Publication 970), Tax Benefits for Education, Chapter 6,