The Tuition and Fees Deduction has been suspended for tax years after 2020. The information below applies to tax years 2020 and prior.
The tuition and fees deduction is available as an alternative to the American Opportunity Credit or the Lifetime Learning Credit to taxpayers who qualify. The qualifications are similar to those of the American Opportunity Credit:
- The student can be the taxpayer, spouse, or a dependent enrolled at an "eligible educational institution".
- An eligible educational institution is any accredited postsecondary public, nonprofit, or private college, university, or vocational school. A school outside the U.S. qualifies if it is able to participate in a student loan program administered by the Department of Education.
- Generally the student will have received Form 1098-T from the institution. Some institutions aren't required to send the student Form 1098-T based on the existing rules, so if the student didn't receive Form 1098-T they can still claim the deduction. Irrespective of whether the student receives Form 1098-T or not, they need to be able to substantiate their qualified expenses as well as enrollment in the educational institution.
- Qualified expenses include tuition, books, supplies, and equipment required for the course of study, as well as nonacademic fees paid to the institution if they are required for enrollment. Fees for noncredit courses, sports, games, or hobbies can be included only if they are part of the degree program or if they help the student acquire or improve job skills.
- Qualified expenses don't include room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses, nor fees for noncredit courses that don't contribute to the student's degree program. An expense taken as a deduction elsewhere in the tax return, such as on Schedule A or C, cannot be included in qualified expenses.
- Qualified expenses are adjusted by the amount of tax-free educational assistance, e.g., assistance received via they taxpayer's employer, Pell grants and other scholarships and fellowships, and veterans organizations, but not including gifts, bequests, or inheritance.
- Qualified expenses paid this year are used to figure this year's deduction, even if they include payment for an academic period during the first three months of the following year.
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Additional information:
IRS: Instructions for Form 8917 - Tuition and Fees Deduction