8054 / Are expenses relating to higher education deductible?
Editor's Note: Late in 2019, Congress acted to extend the deduction for qualified tuition and expenses, discussed below, through 2020. However, the Section 222 deduction was repealed for later years.1
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
Qualified tuition and related expenses are tuition and fees required for the enrollment or attendance of the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer (for whom he is allowed a dependency exemption) at an eligible educational institution (defined in Q 761). Qualified tuition and related expenses do not include nonacademic fees such as room and board, medical expenses, transportation, student activity fees, athletic fees, insurance expenses, personal, living, family, or other expenses unrelated to a student's academic course of instruction. Additionally, qualified tuition and related expenses do not include expenses for a course involving sports, games, or hobbies, unless it is part of the student's degree program.6
1. Pub. Law No. 116-94.
2. IRC §§ 222(a), 222(e).
3. IRC § 222(b)(2)(B).
4. IRC §§ 222(b)(2)(A), 222(b)(2)(B).
5. IRC § 222(b)(2)(C).
6. IRC § 222(d)(1), 25A(f)(1).