Higher Education Deductions

When I posted about credits for higher education I was asked about deductions for high education and decided to put a full post about it. The sad part I have to start with is that the tuition deduction is temporary: 2011 is scheduled to be the last year that taxpayers can take this deduction. However under most cases the credits are more helpful. You would only use the deduction when you have already maxed out the credit, say you have multiple students in one household or you AGI exceeds the requirements for the credit. The maximum AGI you can have for the deduction is $160,000 if married filing a joint return or $80,000 if single, head of household, or qualifying widow(er).

It has the same limitations as the credit, can't be used for living expenses, may not be used if you are paying from a 529 or using a scholarship etc. See the credit's article for all the limitations. However, the deduction is extremely clear on one point, books or supplies bought from the college are deductible, books and supplies, even if required, bought from another source are not. This means if you buy your books online you may not deduct the cost of them via this deduction.

If married filing a joint return and your AGI is under $130,000 you can deduct up to a max of $4000, between $130,000 and $160,000 the max is $2000. If single, head of household, or qualifying widow(er) and your AGI is $65,000 or less you can deduct up to a max of $4000, between $65,000 and $80,000 the max is $2000.