Education expenses can add up quickly, and any kind of financial relief can really make a difference. You may be able to deduct certain education expenses at tax time. If you pay tuition for yourself, a spouse, or another dependent, you may qualify to deduct a portion of the expenses. However, it may be more worthwhile to look at using a credit for tuition and fees instead of directly deducting them. You should first check out eligibility for:
- The American Opportunity Tax Credit (AOTC)
- Lifetime Learning Credit (LLC)
- Deducting the expense as an itemized business expense
If you want to deduct tuition and fees, you don’t have to itemize expenses. Instead, you can just adjust your income on your Form 1040. If you are married, you have to file jointly in order to claim education expenses, and you can’t be listed as a dependent on another taxpayers return.
Taxpayers are subject to certain limitations related to their modified adjusted gross income. Those with a MAGI that exceeds the limit will receive a reduction or even a complete elimination of the education expense deduction depending on which status is used to file. You can’t claim a deduction along with one of the educational credits for the same student in one tax year. Although, you may be able to combine your tuition and fees with eligible business expenses. These expenses can’t be claimed more than once.
You can’t claim a deduction if your tuition or other expenses were paid through a grant, scholarship, fellowship, or other eligible savings plan. You also can’t deduct expenses you paid using distributions from an educational tuition plan, though you can claim the portion that is equal to the contribution you made.