What You Should Know to Write Off Education Expenses

March 09, 2018
What You Should Know to Write Off Education Expenses

Reduce your tax bill with education deductions

The IRS defines "qualified education expenses" as "amounts paid for tuition, fees and other related expenses for an eligible student.

The good news is that the tuition and fees deductions from past years survived the Bipartisan Budget act of 2018. You can reduce the amount of your income subject to tax by up to $4,000, even if you do not itemize deductions on Schedule A (Form 1040). The amount of the deduction, however, can only be what exceeds 2% of your adjusted gross income. Also, the qualified expenses must be for higher education.

The deductions that qualify

College tuition and fees paid by you, your spouse or your dependent are deductible. Also, any personal interest you paid on a student loan, subject to income limits of $80,000 ($160,000 if filing a joint return) is subject to a special deduction. (See the IRS web page on Tax Benefits for Education for details and restrictions.)

Specific examples of qualified education expenses are for books, supplies, and equipment the student needs for a course. The costs do not have to be paid directly to the school. For example, books purchased from an off-campus bookstore qualify for the education deduction.

Also, student activity fees required for enrollment or attendance at the college or university are deductible. The fees must be expenses for an academic period starting during the tax year or the first 3 months of the next tax year.
These expenses do NOT qualify:

Even if the institution charges for the below expenses as a cost of enrollment or attendance, they do not qualify as deductible education expenses:

1.Room and board
2.Insurance
3.Medical and student health fees
4.Transportation
5.Personal or living expenses

Business education deductions qualify

Finally, good news for non-students: You can deduct business education expenses related to your current business, occupation or trade—including audio and video tapes, seminars and trade show expenses.