Higher Education Expenses Deduction

In lieu of taking one of the education credits, you may be eligible to take a deduction in 2014 for qualified tuition and related expenses, including course materials. The maximum deduction is $4,000, though it is phased out at higher income levels. To claim a deduction, you must file Form 8917, Tuition and Fees Deduction with your Form 1040 or Form 1040A.

The phaseout of the deduction occurs in the income range from $65,000 to $80,000 for single filers and from $130,000 to $160,000 for joint filers. If your income falls within the phaseout range, then the maximum deduction is $2,000. If your income is over that range, you cannot take a deduction.

An important feature of the tuition and fees deduction is that it isn't an itemized deduction. Rather, you can deduct it even if you don't itemize. More importantly, the deduction serves as an adjustment to your income and reduces your adjusted gross income (AGI). This may be helpful in minimizing other tax obligations.

Warning You cannot take both an education credit from Form 8863 and the tuition and fees deduction for the same student for the same tax year.

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