There are tuition deductions that can be taken for those who are seeking an education after high school. These tuition deductions can help an individual save hundreds of dollars on her U.S. federal income tax returns. To qualify for a deduction based on educational claims, there are a number of requirements that must be met.
The most common of the tuition deductions is the tuition and fees tax deduction. To qualify for this deduction, a person must attend a qualifying school, which is nearly any accredited school in the United States. Further, there are income qualifications. The deduction is only available for those whose adjusted gross income is $65,000 US Dollars (USD) or less per year for singles of $130,000 USD for couples.
The unusual point about the tuition and fees tax deduction is that it can be claimed even above a standard deduction. In other words, even for those who do not itemize their deductions normally, this is a deduction that can be claimed -- up to $4,000 USD for tuition and fees. Expenses such as travel costs and living costs do not qualify for this benefit. Therefore, it is important for the taxpayer to understand exactly what tuition deductions may apply to and use it appropriately.
Technically speaking, this is the only tuition deduction offered by under the U.S. tax code. There may be other types of tuition deductions offered from other countries. However, in some cases, there may be other tax benefits available in the United States that are even more lucrative from a tax standpoint than deductions.
For those who are planning to attend a university, these education tax credits actually directly reduce the amount of income tax you pay. A deduction only reduces the amount of income on which taxes are owed. Comparing the two, a tax credit is always worth more.
The types of education tax credits offered include the Hope credit and the Lifetime Learning credit. To be eligible for this income tax credit, a single taxpayer can have an adjusted gross income of no more than $58,000 USD for individuals and $116,000 USD for couples. However, only one of these credits can be claimed in any single year.
Still, though both credits cannot be claimed in the same year. It is possible to claim the tuition deduction and one tax credit. However, to claim these credits, education cannot entirely be paid for through loans or grants. Rather, the student must pay for at least the portion of expenses they are claiming on their taxes. For those who are paying back loans, there may be deductions for the interest paid on those loans.