The tuition and fees deduction was in effect through the 2020 tax year but has since expired. However, there are other education-related deductions you may be eligible for. Here’s what you need to know about this deduction and your eligibility.
The Tuition and Fees Deduction Expired in 2020
The tuition and fees deduction was on unsteady footing after the passing of the Tax Cuts and Jobs Act (TCJA) in 2017. That legislation ended this tax break. However, Congress revived the deduction the next year with the Bipartisan Budget Act of 2018 (BBA). The BBA retroactively renewed it for the 2017 tax year, but the deduction was set to expire at the start of the 2019 tax year. After that, the Taxpayer Certainty and Disaster Relief Act of 2019 reinstated the deduction through the 2020 tax year. The deduction then expired after the end of the 2020 tax year. The Consolidated Appropriations Act of 2021 shifted the deduction for qualified tuition and expenses to instead increase the income limitation on the lifetime learning credit, enabling qualifying taxpayers to still receive benefits.
Where to Report the Tuition and Fees Deduction
The deductions for these tuition costs and fees were reported on Schedule 1 of Form 1040. Taxpayers also used Form 8917 to detail and calculate their deduction. These adjustments to income were particularly advantageous because, you did not have to itemize to claim them. Itemizing became less common after the TCJA nearly doubled the standard deduction. You could claim tuition and fees deductions and itemize your taxes, or you could claim the tuition and fees deductions and take the standard deduction. Adjustments to income determine your AGI, and that’s important because several other tax breaks and your overall tax bracket depend on your AGI. Some tax advantages are phased out or eliminated as your AGI grows.
Finding Information on Form 1098-T
If you had eligible expenses, you should have received Form 1098-T from the education institution that applies to the deduction. To claim the deduction, you had to use the amount that appeared in box 1—this is what you actually paid. It can be different from the number that appeared in box 2. For instance, you might have paid in advance for expenses incurred in the first three months of the next calendar year, so those extra payments would be reflected in box 1 but not box 2. You needed to enter the information on IRS Form 8917 and on your Form 1040 and submit Form 8917 with your tax return.
Qualifying Rules for the Deduction
This deduction was available to taxpayers who paid tuition and other required fees for attending college or another post-secondary school. Parents could deduct tuition for their child as long as the student was their dependent. Students could also claim this deduction for their own education expenses. Those who are married and file jointly could claim this deduction if one of the spouses attended school. Expenses related to student activities and sports generally weren’t deductible. Nor were fees for room and board, health insurance, transportation, or courses not required to achieve a degree. However, some costs associated with activities and athletics were deductible if required by the school or directly tied to a student’s chosen career path. The maximum amount you could claim for the tuition and fees adjustment to income was $4,000 per year. The deduction was further limited by income ranges based on your modified adjusted gross incomes (MAGIs). As a result, high-income individuals may have found that they didn’t qualify for this deduction.
Filing an Amended Return
You can file an amended return up to three years after you filed your original return, or up to two years after you paid the tax due for that year, whichever is later. If you missed this deduction in 2018, 2019, or 2020 but were eligible, you can now go back and take advantage of it. These amendments can be made by filing Form 1040-X.
