8054 / Are expenses relating to higher education deductible?
For taxable years beginning after 2001 and before 2021, an above-the-line deduction (see Q 715) is available for qualified tuition and related expenses (see below) paid by the taxpayer during the taxable year, subject to certain limitations.2
A deduction of $4,000 in 2020 was available for taxpayers with adjusted gross income (see Q 715) that did not exceed the following limits: single, $65,000; married filing jointly, $130,000. A more limited deduction of $2,000 is available for taxpayers with adjusted gross income that falls within the following limits: married filing jointly, $130,000 – $160,000; single, $65,000 – $80,000.3 Taxpayers with adjusted gross income above these limits were not entitled to a deduction.4 (Note that these amounts are not adjusted for inflation). As a practical matter, this deduction could be used by taxpayers whose income is too high to utilize the Hope Scholarship (American Opportunity) or Lifetime Learning Credit.
Adjusted gross income (see Q 715) for this purpose is determined before the exclusions for income derived from certain foreign sources or sources within United States possessions and after the inclusion of any taxable Social Security benefits, the exclusion for savings bond interest used for education expenses, the exclusion for certain adoption expenses, any deductible IRA contributions, interest on education loans, and adjustments for passive activity losses or credits.5