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Tuition and Fees Deduction for Higher Education

write off graduate school tuition

The Tuition and Fees Deduction was extended through the end of 2020. It allows you to deduct up to $4,000 from your income for qualifying tuition expenses paid for you, your spouse, or your dependents.

When can I take this deduction?

Which expenses qualify, what if i receive grants or scholarships, who qualifies, how much can i deduct, no double-dipping.

Student reading in a library

You can deduct qualifying expenses paid for:

  • Education during in the year, or
  • Education that begins during the year, or
  • Education that begins during the first three months of the following year.

Qualifying expenses include what you pay in tuition and mandatory enrollment fees to attend any accredited public or private institution above the high school level.

You cannot take a deduction for:

  • Room and board, optional fees (such as for student health insurance), transportation, or other similar personal expenses.
  • Course-related books and supplies, unless you are required to buy them directly from the school.
  • Any course involving sports, games or hobbies, unless it’s part of the degree program.

You have to subtract any scholarships, educational assistance, or other nontaxable income spent for educational purposes (other than gifts or inheritances). For example, if your employer offers a tuition reimbursement plan as a fringe benefit that pays $1,000 of the cost of a $1,500 course, only the remaining $500 would count for purposes of this deduction.

Qualified expenses you pay for yourself, your spouse or your dependents are eligible for the deduction.

Exceptions:

  • If you can be claimed as a dependent on your parents' or someone else's tax return, you cannot claim the higher education deduction.
  • If you are married and choose the married filing separately tax status, you cannot take this deduction.

The deduction is $0, $2,000 or $4,000 depending on your Modified Adjusted Gross Income (MAGI).

  • $4,000 deduction for MAGI of $65,000 or less ($130,000 or less for joint returns).
  • $2,000 deduction for MAGI between $65,001 and $80,000 (between $130,001 and $160,000 for joint returns).
  • $0 if your MAGI exceeds these limits.

You can't deduct or take a credit for the same expense twice.

If you deduct these expenses under some other provision of the tax code, such as for employee or business expenses, you cannot also deduct the expenses for the Tuition and Fees Deduction.

Also, you can’t deduct expenses paid with tax-favored money including:

  • Tax-free interest from savings bonds
  • Tax-free earnings from qualified state tuition program (Section 529 Plans)
  • Tax-free earnings from Coverdell Education Savings Account

The Tuition and Fees Deduction cannot be combined with the American Opportunity or Lifetime Learning credits for any single student in a single tax year.

For a general overview, see IRS Publication 970: Tax Benefits for Education .

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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Can you deduct graduate degree program tuition expenses?

February 10, 2022 by glynis miller, cpa, mst.

Graduation Hat

Enrolled in a graduate degree program in conflict resolution. Can I deduct the tuition expenses as a job-related education expense in the federal and nys taxes? -Frankie Frankie, You asked if you could deduct the tuition expenses for your enrollment in a graduate degree program for “Conflict Resolution” as a job-related education expense on your federal and NY state taxes. While you have asked a very direct question, it must be noted that federal and state tax laws can be very different. In certain circumstances, the state may not conform to the same tax treatment offered by the federal tax code. Thus, we will address your question in two separate parts.

Federal Treatment

  • Your education must either be required by your employer or the law to maintain your present salary, status, or job, or
  • Your education must maintain or improve the skills needed in your present work.
  • The education cannot be completed merely to meet any minimum education requirements of your present job or business,
  • The education cannot be a part of a program of study that qualifies you for a new trade or business.
  • You (taxpayer) were already established in your job or business;
  • The graduate degree maintains or improves the skills used in your current job or business; and
  • The tasks and activities you were qualified to perform before the graduate degree are similar to those you qualified for afterward.

New York State Treatment

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write off graduate school tuition

Glynis Miller, CPA, MST Tax Content Developer

Glynis began her career with TaxAudit in February 2006 as a Seasonal Tax Return Reviewer. In December of 2008, she joined the permanent staff as an Audit Representative. Glynis has been an instructor for both continuing education tax classes and various staff training classes since 2009. Glynis holds a Bachelor of Science Degree in Accounting and a Master’s Degree in Taxation. Prior to joining TaxAudit, Glynis worked in private and public sectors of accounting. She has worked at regional accounting firms preparing tax returns, financial statements, and audit services. Her professional career has spanned over a wide variety of industries from advertising, construction, commercial real estate, farming, manufacturing and more. In 2017, Glynis joined the Learning and Development Department as a Tax Content Developer. She is providing a wealth of accounting and tax knowledge, writing skills, current job awareness, and a very cross-functional skillset to the team. 

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What education expenses are tax deductible?

At a glance.

Some education expenses are tax deductible or may allow you to claim a tax credit. While new tax rules changed what’s available, student loan interest is tax deductible. Additionally, tuition and fees still count as qualified education expenses for the American Opportunity and Lifetime Learning credits.

College is an expensive endeavor. Luckily, some educational expenses can be used to claim a tax credit or deduction. Know which expenses count and what documentation you need to keep to maximize your tax deductions and credits.

Have other student tax filing questions?   Be sure to visit our  Tax Guide for College Students  and find out about student forms that can be filed for free.   

Which college expenses are tax deductible?

What college education expenses are tax deductible?

Given the tax changes in recent years, it’s important to check which college expenses are tax deductible or allow you to take a credit and which expenses no longer qualify. Check out the list below.

  • Tuition and fees  are no longer tax deductible after 2020. The  tuition and fees deduction  was an adjustment to income if you incurred qualified education expenses for you, your spouse, or your dependent. Such expenses must have been required for enrollment or attendance at an eligible educational institution. The deduction was 100% of qualified higher education expenses with a maximum of $4,000, $2,000, or $0, depending on the amount of your modified AGI and filing status. The phaseout for this deduction began at $65,000 ($130,000 for MFJ) for 2020. Prior to 2021, you could generally claim the tuition and related expenses deduction if you paid qualifying education expenses for higher education, paid the education expense for an eligible student, and the eligible student was you, your spouse, or your dependent.
  • Work-related education expenses  were previously tax deductible, but this deduction is not available for employees from 2018-2025 due to changes to itemized deductions with tax reform . Before this change, you may have benefitted from a deduction if the education was required by your employer or by law. However, if you are self-employed you may be able to deduct education expenses. The education must enhance or improve skills related to your trade or business or must be required by law.
  • Student loan interest  is still tax deductible. This college expense deduction lets you reduce your taxable income by up to $2,500 for qualified student interest paid during the year. In this case, qualified means the loan was only for education expenses, not for other types of expenses. The requirements state that the student must be the taxpayer, spouse or dependent. The student must have been enrolled at least half-time at an eligible institution and the program must lead to a degree, certificate or other recognized credential. Furthermore, the loan cannot be from a related person or a qualified employer plan. Find additional  student loan interest deduction  criteria.

What is considered a qualified education expense?

When you claim a credit, such as the American Opportunity Credit or the Lifetime Learning Credit, only certain types of educational expenses will count. Tuition and fees are commonly considered qualified education expenses, but the details can vary beyond those costs.

  • American Opportunity Credit  – In addition to tuition and fees, you can include expenses for books, supplies and equipment (including computers if required as a condition of enrollment)— even if they are not paid to the school.
  • Lifetime Learning Credit  – Included with tuition and fees, you can count costs for course-related books, supplies and equipment (including computers) required to be paid to the educational institution. Note that although the tuition and fees deduction is no longer available, starting in 2021 the income limits for the lifetime learning credit have been increased so the credit is now available for more students.

What doesn’t count as qualified expenses? 

In general, insurance, medical expenses, transportation, and living expenses are not qualified school expenses for an education credit. Likewise, non-credit courses are not qualified education expenses, unless they are part of a degree program.

For more information about eligibility and requirements for these benefits, review our article on  education tax credits . For details about college savings accounts and qualified expenses, check out our information about  saving for college and reducing your tax bill .

Reminder: Keep your documentation! 

Schools will provide (via mail or electronic portal) the student with a  Form 1098-T , which will reflect tuition and fees amounts that the school receives in payment. You may also use payment receipts or any other kind of statements showing the payment of qualified education expenses.

Need help determining deductible college expenses?

Whether you need help determining what you can deduct or your eligibility for education-related benefits, we can help. Our knowledgeable tax pros are experts in uncovering all the credits and deductions available to you.

Make an appointment  to speak to one of our tax pros today.

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Educational Tax Credits and Deductions You Can Claim for Tax Year 2022

Several tax breaks can help you cover the cost of education, and new laws expand some benefits.

Educational Tax Credits and Deductions

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If you're paying back student loans, you may be able to deduct up to $2,500 in interest.

College is expensive, but there are several valuable tax breaks that can help ease the pain.

You may be able to cut your tax bill by up to $2,500 if you're paying college tuition, and you may even be eligible for tax credits that can help cover the cost of continuing education classes to improve your job skills.

Interest you pay on student loans might also be tax deductible, and you can use tax-advantaged savings to pay for college costs.

Here's how families can make the most of these tax breaks to stretch their savings :

American Opportunity Credit for College Costs

The American opportunity credit can cut your tax liability by up to $2,500 if you're paying for the first four years of higher education for yourself, your spouse or a dependent you claim on your tax return.

To qualify for this credit, the student must be enrolled at least half time and be pursuing a degree or other recognized educational credential at a college, university, vocational school or other eligible postsecondary educational institution.

To claim the full credit, your modified adjusted gross income, or MAGI, must be $80,000 or less if single for filing as head of household – or $160,000 or less for married couples filing jointly .

You can claim a partial credit if your MAGI is more than $80,000 but less than $90,000 if filing as single or as head of household – or more than $160,000 but less than $180,000 if married filing jointly. The credit is calculated as 100% of the first $2,000 of qualifying expenses, plus 25% of the next $2,000 – making the maximum credit $2,500 per student.

Eligible expenses include tuition and fees, plus books, supplies and equipment. “The expenses must be paid during the tax year for you to qualify for the tax credit, but you can pay for expenses in 2022 for an academic period that begins during the first three months of 2023,” financial aid expert Mark Kantrowitz says.

You'll usually receive Form 1098-T from the college reporting the qualified expenses you paid. To claim the credit, use IRS Form 8863 . For more information, see IRS Publication 970 Tax Benefits for Education .

Lifetime Learning Credit for Grad School and Continuing Education

If you're going to grad school or taking any continuing education classes – even if you aren't working toward a degree – you may be eligible for the lifetime learning credit. It's worth 20% of up to $10,000 in eligible expenses, with a maximum credit of $2,000 per tax return.

"Having multiple individuals in college does not get you additional credits," Tracie Miller, certified public account and professor at Franklin University, says. Eligible expenses include tuition and required fees for yourself, your spouse or a dependent you claim on your tax return.

Some people who may not have qualified for the lifetime learning credit in the past may now be eligible because the IRS recently increased income limits.

They now are the same as the income limits to qualify for the American opportunity credit – to claim the full credit for tax year 2022, your MAGI must be $80,000 or less if single or head of household, or $160,000 or less for joint filers. You can claim a partial credit if your MAGI is between $80,000 and $90,000 if filing as single or head of household – or $160,000 to $180,000 for married filing jointly.

There's no limit to the number of years you can claim the lifetime learning credit, and its education requirements are much broader than the American opportunity credit's.

You can take the lifetime learning credit for graduate or undergraduate expenses, and you don't have to be enrolled at least half time or working toward a degree. You can also claim the credit for continuing education, certificate programs or separate classes you take to acquire or improve job skills , and it's available for an unlimited number of tax years.

The key is that the class must be offered by an eligible educational institution, including any college, university, vocational school or other postsecondary educational institution eligible to participate in a U.S. Department of Education.

This credit can be valuable for people who lost their jobs and took classes to improve their job prospects. "Courses to acquire new skills may be especially relevant right now," Melody Thornton, a CPA in San Diego, says.

You should receive Form 1098-T from the eligible institution reporting the qualified expenses you paid. To claim the credit, complete IRS Form 8863.

Deduction for Student Loan Interest

“The student loan interest deduction allows a deduction for interest you pay on certain student loans for you, your spouse or a dependent. The interest deduction goes to the person legally obligated to pay the interest," Timothy M. Todd, law professor at Liberty University School of Law in Lynchburg, Virginia, says.

"So, if a parent takes out the loan for their child and the parent makes the interest payments, the parent gets the deduction. However, if a student takes out the loan and the parent pays the interest, it is treated as though the parent transferred the money to the student who then makes the payment,” he says.

The student can't get the break, however, if their parents claim them as a dependent.

To qualify for the deduction in 2022, your MAGI must be less than $85,000 if single or head of household – or $175,000 if married filing jointly. The size of the deduction starts to phase out if your MAGI is more than $70,000 if single or head of household – or $145,000 if married filing jointly.

There is a $2,500 cap on the deduction per return, which means that a married couple gets a maximum deduction of $2,500 even though they could each deduct up to $2,500 if they were single, Todd says. You don't have to itemize to claim the student loan interest deduction.

Some people who usually qualify for the deduction won’t be able to take it in tax year 2022 if they didn’t pay interest on their student loans during the year. That's because starting March 13, 2020, the Biden-Harris Administration paused payments and instituted 0% interest on eligible federal student loans.

Maximizing 529 Tax Breaks for Education at All Ages

You can withdraw money tax-free from a 529 savings plan for college tuition, fees and equipment such as a computer or printer. You can also withdraw money tax-free for room and board if you're enrolled at least half time, even if you don't live on campus.

Eligible expenses for off-campus housing are generally limited to room and board costs the college reports for financial aid purposes – look for the number on your financial aid reward page or ask the aid office.

"For example, if the room and board cost reported by the school is $15,000 but it costs $30,000 for the student living off campus, then only $15,000 is a valid 529 expense," Thornton says.

You can also withdraw money tax-free for a computer, whether you attend school on campus or virtually. Computer program costs are also eligible expenses.

"As long as the student is using it for 529-related coursework, then you can use the 529 for those expenses," Mary Morris, chief executive officer of Virginia529 College Savings Plan, says.

There's no age limit for using the money, and you don't need to be working toward a degree.

"One of the really important things we see are adults going back to school – maybe they lost their job and are taking classes or a certificate program that puts them on a road to a new career," Morris says.

You can withdraw money tax-free from a 529 for those expenses as long as you're taking the classes from an eligible educational institution. You'll get the biggest tax benefits if you can keep the money growing for years in the tax-advantaged account.

It's Not Too Late to Start a 529 Plan

If you don't already have a 529, it might still be worthwhile to open one and make the most of any tax breaks you get for contributions, even if you plan to use the money soon for education expenses.

“For parents thinking of starting a 529 plan, it’s important to realize that although many states offer a state income tax break for contributions to such plans, states typically require that the contributions be made to the 529 plan sponsored by that state,” Todd says.

Visit the Saving For College  website for details about each state's plans and tax rules and the College Savings Plans Network website for information and links to each state program’s website.

As of 2018, you can withdraw up to $10,000 per year, per beneficiary, tax-free to pay tuition for kindergarten through 12th grade.

If your child doesn't use the money for educational expenses, you can switch the beneficiary to another eligible family member. If you take withdrawals that aren't for eligible education expenses, the earnings are taxable and subject to a 10% penalty, although the penalty is waived in some circumstances.

"If a child receives a scholarship, a distribution for up to the amount of the scholarship can be made without being subject to the 10% penalty," Miller says. "The taxpayer must, though, still pay tax on the earnings of this distribution."

Even if your child qualifies for a scholarship, you may still have other eligible expenses that qualify for tax-free withdrawals, such as room and board, fees, books and equipment.

Secure Act 2.0 Expands 529 Options

The new Secure 2.0 tax law will expand the options for unused 529 money. Starting in 2024, families saving for education in 529 plans will be allowed to roll over unused funds from those accounts into Roth IRAs without tax penalties. The 529 plan beneficiary must own the Roth but you can change the beneficiary, Kantrowitz says.

You can roll over only up to the annual Roth IRA contribution limit each year, with a $35,000 lifetime limit per beneficiary. The 529 plan must have been in existence for at least 15 years, and only funds that have been in it for at least five years are eligible for a rollover, he says.

“Financial professionals agree that although there are limitations to the rollovers, it will provide a new option for individuals who find themselves with leftover or unused money in their 529 account but who don’t want to incur the tax penalties that come with taking a nonqualified withdrawal,” Morris says.

Coordinating Tax Credits for Education With Tax-Free 529 Withdrawals

You can qualify for the American opportunity credit or lifetime learning credit and take tax-free 529 withdrawals in the same year but you need to be careful.

"To optimize the tax benefits, you can’t use 529 distributions for the same expenses,” Todd says.

"In short, you can't 'double dip.' If you end up taking out more from the 529 plan than qualified education expenses (after accounting for the expenses used for an education credit), part of the 529 distribution may be taxable,” he says.

For example, if you claim the full American opportunity credit, the $4,000 in tuition and fees you claim is not considered a qualified education expense for your 529, and part of the distribution may be taxable.

If you claim the full lifetime learning credit, you can't take tax-free 529 withdrawals for the first $10,000 in tuition expenses you claimed for the credit but you can withdraw money tax-free from the 529 for additional expenses.

"If you withdraw money from the 529 plan and are possibly eligible to claim a credit, make sure to keep receipts for all costs so that they maximize the benefits between the 529 and the credit," Thornton says.

15 Tax Questions, Answered

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Can I use the American Opportunity Tax Credit for college tuition?

Can i use the lifetime learning tax credit for college tuition, should i claim the american opportunity or the lifetime learning tax credit, was the tuition and fees deduction extended, is college tuition tax deductible yes, it can be.

Our experts answer readers' tax questions and write unbiased product reviews ( here's how we assess tax products ). In some cases, we receive a commission from our partners ; however, our opinions are our own.

  • Some college tuition and fees are deductible on your 2022 tax return.
  • The American Opportunity and the Lifetime Learning tax credits provide deductions, but you can only use one at a time.
  • Neither can be used for room and board, insurance, medical expenses, transportation, or living expenses.
  • See Personal Finance Insider's picks for the best tax software .

Insider Today

Americans can write off qualified college tuition and other education costs on their 2022 tax returns.

That means if you covered any of the costs of a degree program for yourself, your spouse, or your dependent during the year, you could be eligible to use tax credits to reduce the amount you owe the Internal Revenue Service. There are two available, but you can only use one or the other.

Note that couples who are married but filing separately , are not eligible for either of the credits. Neither is someone who is listed as a dependent on someone else's tax return (like your parents'). 

You'll find more information about the qualified education expenses you paid for the year on Form 1098-T , which colleges and universities typically send to students by early February following the tax year.

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Your modified adjusted gross income (MAGI) and filing status will inform how much you're able to deduct. You may not claim the American Opportunity Tax Credit (AOTC) if you're claiming the Lifetime Learning Tax Credit (LLC) in the same tax year.

The AOTC provides a maximum $2,500 per eligible student (see eligibility requirements at the IRS website ) for each of the first four years of higher education. The AOTC is noteworthy because it doesn't apply only to tuition costs. It also may apply to qualifying materials and fees. If qualifying for the AOTC brings your tax liability to zero, you can be refunded up to 40% of the AOTC amount for which you qualify, up to $1,000.

The deduction can be worth the maximum of $2,500 if your MAGI was $80,000 or less as a single filer, or $160,000 or less as a married filer, filing jointly.

If your MAGI for the 2022 tax year was more than $80,000 but less than $90,000 as a single filer, you may qualify for a reduced amount (for married couples filing jointly, that's more than $160,000 but less than $180,000).

Once your MAGI exceeds $90,000 as a single filer, or $180,000 for a joint filer, no longer qualify for this credit.

Just like for the AOTC, your MAGI and filing status will inform how much you're able to deduct. You may not claim both tax credits in the same tax year.

The Lifetime Learning Tax Credit deducts 20% of the first $10,000 of qualified education expenses, up to a maximum of $2,000 per year. Unlike the AOTC, if the credit brings your tax liability to zero, you will not receive any of this money as a refund.

To qualify for the full LLC, your MAGI must be $80,000 or less as a single filer, or $160,000 or less as a married couple filing jointly. 

The amount of the LLC is phased out for single filers between $80,000 and $90,000, and taxpayers earning $90,000 or more can't claim this credit. For married filing jointly, the credit phases out between $160,000 and $180,000, and taxpayers earning $180,000 or more cannot claim this credit.

The Lifetime Learning Tax Credit has a few differences from the American Opportunity Tax Credit. 

The LLC doesn't have to be used for college . While it may be used to claim college tuition, it doesn't have to be used for a degree or recognized education credential like the AOTC.  

No time limit . The LLC isn't limited to four years — it can be used for all years of higher ed, including skill-building courses.

It doesn't cover materials . The AOTC can be used to cover course materials, but the LLC cannot. 

The LLC is available for a single course at a time . For the AOTC, the student must be enrolled at least half-time. For the LLC, you can file for the credit if you're taking a single course.

You can qualify for the LLC if you have a felony drug conviction . This is not the case for the AOTC.

Neither the AOTC nor the LLC can be used for the costs of room and board, insurance, medical expenses, transportation, or living expenses.

To compare all the similarities and differences between the two available tax credits, the IRS has a helpful chart .

The tuition and fees deduction, which you may have used for the 2019 or 2020 tax year, was repealed for 2021 and later years.

That doesn't mean you'll be unable to deduct qualified education expenses . you'll still be able to do so, by claiming the American Opportunity Tax Credit, or the Lifetime Learning Tax Credit. You cannot take both in the same tax year.

To qualify for either, you must meet the following criteria:

  • You — or your dependent, or a third party like a friend or relative — pays qualified education expenses for higher education
  • The eligible student, who must be yourself, your spouse, or a dependent, is enrolled at an eligible institution

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How to Deduct MBA Tuition on Your Taxes

There are several ways MBA students can deduct tuition on their taxes, experts say.

Deduct MBA Tuition on Your Taxes

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Under the IRA's tuition and fee deduction, an MBA student can adjust up to $4,000 of taxable income provided the annual income is under a certain limit.

With many top-ranked full-time MBA programs costing more than $50,000 in tuition per year, the ability to deduct b-school expenses come tax time offers some students a way to recoup costs.

Brandon Yahn, 32, who completed his MBA in 2012 at the University of California—Berkeley's Haas School of Business , did exactly that, deducting his b-school tuition from his taxes.

"The interesting thing about this deduction is you can really deduct tuition for about three years unless you're making an absurd amount of money before you go to business school," says the West Virginia native, who now runs a California-based student loan information startup.

Under the IRS's tuition and fee deduction , a student's annual income can't exceed $80,000 if filing as an individual on the return. That limit goes up to $160,000 if the taxpayer is married and filing jointly.

Yahn says most full-time b-school students who worked in business beforehand probably qualify since these students enter their programs after working for several months that year. "I didn't hit the limit, so I was able to make the deduction."

The UC—Berkeley grad took the deduction the following year, after starting b-school, since he earned money from his 12-week paid internship that summer; he made the deduction during his final year, too.

"You're a student before starting your full-time job again. Even if you're making $160,000, assuming you're working half the year, it's under $80,000 individually and you can deduct your third year," he says.

For prospective or current b-school students, here are a couple options to consider when claiming money on your taxes.

• Claiming tuition as a deduction on your individual tax return: "To qualify, you have to pay for the tuition yourself, it can't have been paid with tax-free scholarships or grants," says Josh Zimmelman, owner of New York-based Westwood Tax & Consulting.

"Tuition and student activity fees are deductible," Zimmelman says. "But housing and travel expenses are not."

With this deduction, a taxpayer can adjust taxable income up to $4,000. Tax experts say this can save around $1,000 for those at the 25 percent tax rate.

• Deducting tuition as an allowable business expense: Under this IRS tax code, the business deduction for work-related education allows an individual to take this deduction if the education is required either by an employer or "maintains or improves skills needed in your present work."

Under the work-related education deduction, b-school expenses must be more than 2 percent of the taxpayer's adjusted gross income.

"The IRS says you can deduct any education expense that's related to your current job or field, as a business expense," says Wendy Connick, owner of Connick Financial Solutions. "If you can justify your MBA as somehow related to your job, which should be possible for many business careers, you can swing this deduction."

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Peter Kuck, who competed his MBA last year from the Anderson School of Management at the University of California—Los Angeles, used this deduction since he continued to work during b-school.

"As an MBA student with an income source at the time, I utilized the unreimbursed business expense deduction to fully reduce my taxable income by the amount paid in tuition each year," he says. "This deduction is available for individuals who are able to show that the MBA did not qualify them for an entirely new job, but rather augmented their ability to perform at their current job."

Kuck, who also runs a California-based personal finance website called Thrift Gurus, says this deduction is the better strategy for non-career switchers.

"A lot of the times – especially with an executive MBA – you're working to increase or maintain your skills for your present work, and that's one of the qualifications for this deduction," says Marguerite Weese, vice president and wealth planner at Wilmington Trust who is also a tax attorney. "It certainly fits in well."

But Weese says students should make sure that they meet the IRS's guidance on qualified work education – especially if they stop working at some point during school. "There is a rule about education if you stop working for a certain period of time."

Travis Greaves, a tax partner at Greaves Wu, LLP in the District of Columbia, says part-time MBA students have a greater success with this deduction.

"Courts have found that full-time students were not carrying on a trade or business while in the program, and that an MBA may qualify a student for a new trade or business," Greaves says. "With respect to part-time students, the key is proving that the student's duties did not change after receiving the MBA."

Trying to fund your education? Get tips and more in the U.S. News Paying for Graduate School center.

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American Opportunity Credit and Other Education Tax Credits for 2023

Ryan Lane

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

If you paid for college in the last year, you may be able to claim the American opportunity credit or lifetime learning credit, or the tuition and fees deduction. The American opportunity credit is generally the most valuable education tax credit, if you qualify.

You can claim these education tax credits and deductions as a student if you're not claimed as a dependent on anyone else's tax return. Parents can claim the credit for a student who is a dependent. Spouses can claim the credit if they use the married filing jointly status.

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American opportunity credit

How it works: You can lower your tax bill by up to $2,500 if you paid that much in undergraduate education expenses last year. The American opportunity tax credit lets you claim all of the first $2,000 you spent on tuition, school fees and books or supplies needed for coursework — but not living expenses or transportation — plus 25% of the next $2,000, for a total of $2,500.

Who can claim it: The American opportunity credit is specifically for undergraduate college students. As a student, you can claim the credit on your taxes for a maximum of four years as long as no one else, like your parents, claims you as a dependent on their tax returns. Parents will claim the credit, instead of the student, if they paid for the student's education expenses and have the student listed as a dependent on their return.

You can get the full education tax credit if your modified adjusted gross income, or MAGI, was $80,000 or less in 2023 ($160,000 or less if you file your taxes jointly with a spouse). If your MAGI was between $80,000 and $90,000 ($160,000 and $180,000 for joint filers), you’ll receive a reduced credit. If you earn more than $90,000 ($180,000 for joint filers), you can’t claim this credit.

What it’s worth: The American opportunity credit lowers the amount of taxes you pay. For example, if you owe $3,000 in taxes and get the full $2,500 credit, you’ll only have to pay $500 to the IRS.

Is the American opportunity credit refundable? Yes. You can still receive 40% of the American opportunity tax credit's value — up to $1,000 — even if you earned no income last year or owe no tax. For example, if you qualified for a refund, this credit could increase the amount you'd receive by up to $1,000. That's why the American opportunity credit is typically the best education tax break for students and their families.

» MORE: Guide to filing taxes with student loans

Lifetime learning credit

How it works: You can claim 20% of the first $10,000 you paid toward 2023 tuition and fees, for a maximum of $2,000. The lifetime learning credit doesn’t count living expenses or transportation as eligible expenses .

Who can claim it: The lifetime learning credit applies to undergraduate, graduate and non-degree or vocational students, and there’s no limit on the number of years you can claim it. So it’s ideal for graduate students or anyone taking classes to develop new skills, even if you already claimed the American opportunity tax credit on your taxes in the past. You can't claim both the American opportunity credit and the lifetime learning credit for the same student or the same qualified expenses.

What it’s worth: If your MAGI was between $80,000 and $90,000 ($160,000 to $180,000 if you filed jointly), you can get a reduced credit. You can’t get the credit if your MAGI was more than $90,000 ($180,000 if you're married and filing jointly).

Is the lifetime learning credit refundable? No. You cannot receive the lifetime learning credit as a refund if you earned no income or owe no tax.

» MORE: The difference between tax credits and tax deductions

Education tax forms

In January your school will send you Form 1098-T, a tuition statement that shows the education expenses you paid for the year. You’ll use that form to enter the corresponding amounts on your tax return to claim an education tax credit or deduction.

If you also paid student loans , you may be able to deduct student loan interest from your taxable income. If you paid more than $600 in interest, your servicer will automatically send you Form 1098-E. You can still deduct interest if you paid less than $600, but you’ll have to ask your servicer for the form.

If your company provided funds for educational assistance — like tuition reimbursement or employer student loan repayment — up to $5,250 can be excluded from your taxable income.

On a similar note...

write off graduate school tuition

Yes, there really is a tax break for upper-income graduate students and Congress won’t let it expire

Subscribe to the center for economic security and opportunity newsletter, jason delisle jason delisle resident fellow - american enterprise institute @delislealleges.

May 31, 2018

  • 13 min read

In an earlier Evidence Speaks post this year, Susan Dynarski and Judith Scott-Clayton summarized important research showing that federal tax benefits for college tuition have had no measurable impact on increasing college-going behavior. 1 Moreover, they note that the benefits are numerous, overlapping and complicated. Yet for all their flaws, these tax breaks enjoy such strong support from lawmakers that even the oddest one, which quietly expires each year, is always revived in a last-minute bill just in time for the tax filing season. The tuition and fees deduction (“the deduction”) was recently extended for a seventh time in an omnibus budget bill in February. 2 Out of all the tuition tax benefits the government offers, this one should be relatively easy to let go because of whom it unintentionally targets.

Here is how the deduction works. Tax filers can deduct up to $4,000 of tuition and fees paid for higher education in the tax year. It is an “above-the-line” deduction, meaning filers can claim it without having to itemize deductions. As a deduction, filers earn a benefit equal to their marginal tax rate. The maximum benefit any filer could extract from the deduction is $880, the top marginal tax rate of those who are eligible (22 percent) times $4,000. There is no limit to the number of times a filer can claim the deduction, so long as he has incurred tuition expenses, and it does not matter what type of credential he pursues. There is, however, an income limit. Taxpayers with adjusted gross incomes above $80,000 ($160,000 for joint filers) cannot claim it.

There is nothing odd about those terms per se, but they interact with other tax benefits the government offers for tuition such that only upper-income graduate students benefit from the deduction. First, undergraduates, while eligible for the deduction, don’t claim it because a different tax credit only for undergraduates is more beneficial: the American Opportunity Tax Credit, which is worth up to $2,500 in tax relief for filers earning up to $90,000 ($180,000 for joint filers). 3 Tax filers can claim only one tuition tax benefit although they usually qualify for more than one. Second, graduate students with lower and middle incomes are also eligible for the deduction, but they can claim the $2,000 Lifetime Learning Credit, which almost always delivers a bigger tax break than the tuition and fees deduction. 4 But the Lifetime Learning credit has a lower income cut-off than the deduction. Those earning over $66,000 ($132,000 for joint filers) in 2017 cannot claim it. 5

That’s how the deduction ends up targeting upper-income graduate students. While graduate students would always obtain a larger benefit from the Lifetime Learning Credit, they cannot claim it if they earn more than $66,000 ($132,000 for joint filers). They can, however, claim the deduction until their earnings exceed $80,000 ($160,000 for joint filers). Thus a narrow band of graduate students, those earning between the income limits for the two benefits, are the only students who would claim the deduction. At those levels, their incomes are higher than the incomes of about 80 percent of U.S. households. 6 Of course, tax filers can unintentionally claim a less generous benefit if they are eligible for more than one, such as an undergraduate claiming the deduction when she was eligible for the American Opportunity Tax Credit, which does happen. 7

Note: Students eligible for multiple benefits can claim only one benefit per year.

Source: Internal Revenue Service

*Students must be in their first four years of postsecondary education in order to claim the American Opportunity Tax Credit. While it is theoretically possible for a graduate student to claim the credit, in practice virtually all beneficiaries are undergraduates.

What the data say about eligible students

Using a representative sample of graduate students in 2011-12, Kim Dancy of New America and I estimated that just 8 percent of graduate students would benefit from the deduction. Meanwhile, 64 percent of graduate students would benefit most from the Lifetime Learning Credit. The rest of graduate students (28 percent) were ineligible for any tax benefit because they have no taxable income, their tuition was fully covered by grants and scholarships, or their earnings were too high. 8 The analysis assumes that tax filers claim the benefit that provides them with the largest tax reduction if they qualify for more than one. These numbers have likely shifted in recent years, with even fewer students benefiting from the deduction, because Congress has increased the earnings cap for the Lifetime Learning Credit to account for inflation but left the limits for the deduction unchanged.

We also estimated the average benefit graduate students would claim through the deduction for the 2011-12 academic year. At $621, it was smaller than the $859 average benefit that filers eligible for the Lifetime Learning Credit could claim. 9 Due to small sample sizes, however, we were unable to reliably assess important characteristics of filers eligible for the deduction, such as field of study.

The deduction didn’t start out as a graduate school tax break

As is often the case in public policy, lawmakers did not set out explicitly to provide a tax break to upper-income graduate students. In fact, graduate students were never the target group for the tuition tax breaks; undergraduates were always the focus. Although graduate students have been eligible for the tax benefits since their inception, changes to the policies over the years have left the deduction benefiting upper-income graduate students alone.

Prior to mid-1990s, the federal government did not offer widely-available tax breaks for college tuition. The idea first gained prominence when President Clinton proposed a $10,000 deduction for college tuition as part of his “Middle-Class Bill of Rights” reelection platform. 10  After critics noted that a deduction would provide more help to families in higher tax brackets, Clinton added a separate tax credit for the first two years of college to his proposal to provide more even benefits. 11 Congress adopted the president’s idea for the credit in 1997, naming it the Hope Tax Credit, but rejected the additional proposal for a $10,000 deduction. They instead replaced that proposal with a separate credit for “lifelong learning” (i.e., the Lifetime Learning Credit) that families could claim for education after the first two years of college, including graduate school. 12

Thus, President Clinton’s original idea for a deduction and a credit was replaced with two credits, the Hope Tax Credit and the Lifetime Learning Tax Credit. In keeping with their original purpose to provide middle-class tax relief, Congress capped income eligibility for both benefits at $55,000 ($100,000 for joint filers) in 1997. 13

With these two tax credits on the books, the idea of a deduction for tuition would be unnecessary and redundant, yet Congress later decided to add one anyway. Seemingly out of nowhere, lawmakers included a $4,000 deduction for tuition and fees in the Economic Growth and Tax Relief Reconciliation Act of 2001, the sweeping bill that included President Bush’s campaign proposal to cut marginal tax rates. 14

The deduction differed from the two initial tax credits in a key way, which partially explains why lawmakers added it. Families earning up to $80,000 ($160,000 for joint filers) would be eligible as of 2004. That was significantly higher than the income cutoff for the Hope and Lifetime Learning Credits at the time and would therefore offer tax benefits to families with incomes arguably well above middle class. But why not just raise the income limits on the existing credits then? Because creating the new deduction was a way to restrict costs relative to expanding the existing Lifetime Learning Credit in terms of forgone revenue to the government. Recall that the value of the deduction is worth the amount deducted times the marginal tax rate, which at the time it was created would have been $1,120 at the most. 15 That is about half the maximum value of the Lifetime Learning credit. 16

In other words, the deduction was a way to let upper-income families into the college tax benefit club on the cheap. It also ensured their benefits would be smaller than those of the middle-class families, who were eligible for the credits.

At the time it was created, the deduction was as much an undergraduate benefit as a graduate one. Upper-income families would claim it for tuition paid in pursuit of either degree. According to my analysis referenced earlier, about the same share of graduate students as undergraduates qualified for it prior to 2009. 17 But in 2009, Congress would make it pointless for almost any undergraduate to claim the deduction. That year, lawmakers replaced the Hope Credit with the American Opportunity Tax Credit, which provided larger benefits than the deduction with an income cutoff even higher than the deduction. With upper-income undergraduates now qualifying for American Opportunity Tax Credit, graduate students became the only group left who could benefit from the original tuition and fees deduction.

While Congress never decided to directly create a special tax break for upper-income graduate students alone, opting to extend the deduction year after year is effectively the same thing. The latest one-year extension, which made the deduction available for the 2017 tax year, cost the government over $200 million in forgone revenue. 18

At a time when an undergraduate education feels financially out of reach for so many families, it’s fair to ask why Congress continues to spend these resources on students who have already earned an undergraduate degree. Moreover, these students earn a median household income of $102,000, according to my analysis. 19 There does not appear to be a good answer to that question other than inertia. Lawmakers have always extended the benefit so they continue to extend it. They may not realize, however, that it no longer benefits undergraduate students.

All of the tax benefits may be a policy failure for not increasing enrollment or being overly complex, but at least those for undergraduates put more money in the pockets of low- and middle-income families working toward their first degree. Today, the deduction does neither. It helps those who already have an undergraduate degree and earn high incomes to boot. While its cost in terms of forgone revenue are relatively modest, those resources would be better spent on aid that encourages students to enroll in and complete an undergraduate degree.

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  • Sue Dynarski and Judith Scott-Clayton, “The Tax Benefits for Education Don’t Increase Education,” Brookings Institution, April 2018, https://www.brookings.edu/research/the-tax-benefits-for-education-dont-increase-education/ .
  • Bipartisan Budget Act of 2018, Public Law 115–123, § 40203 (2018).
  • Internal Revenue Service, “Instructions for Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) (2017),” https://www.irs.gov/pub/irs-pdf/i8863.pdf .
  • There are some circumstances when the deduction might produce a larger benefit than the Lifetime Learning Credit if a filer paid tuition and fees below $4,000 and he is in the highest tax bracket of those eligible for the deduction. For example, a filer in the 22% tax bracket who deducts $3,000 in expenses receives a $660 tax reduction; under the Lifetime Learning credit his benefit would be $600.
  • Author’s calculation using the American Community Survey, 2016.
  • Government Accountability Office, “Improved Tax Information Could Help Families Pay for College,” May 2012, https://www.gao.gov/assets/600/590970.pdf
  • Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015, 6–7, https://na-production.s3.amazonaws.com/documents/graduate-students-and-tuition-tax-benefits.pdf .
  • Author’s calculation using the National Postsecondary Student Aid Study 2011–12. See also Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015.
  • William J. Clinton, “Address to the Nation on the Middle Class Bill of Rights,” December 15, 1997, www.presidency.ucsb.edu/ws/?pid=49591 .
  • Douglas Lederman, “The Politicking and Policy Making Behind a $40-Billion Windfall: How Clinton, Congress, and Colleges Battled to Shape Hope Scholarships,” Chronicle of Higher Education , November 28, 1997.
  • Taxpayer Relief Act of 1997, Public Law 105–34 § 201 (1997).
  • Taxpayer Relief Act of 1997, Public Law 105–34 § 101 (1997).
  • Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107–16 § 431 (2001).
  • The top marginal tax rate for filers eligible for the deduction was 28 percent in the mid 2000s.
  • See endnote 4. for an explanation of how sometimes when tuition and fees are below $4,000, tax filers can qualify for a larger tax reduction through the deduction than if the Lifetime Learning Credit.
  • Jason Delisle and Kim Dancy, “A New Look at Tuition Tax Benefits,” New America, November 2015, https://static.newamerica.org/attachments/10416-a-new-look-at-tuition-tax-benefits/TaxCredits11.2.277d3f7daa014d5a8632090f97641cee.pdf ; and Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015, 6–7, https://na-production.s3.amazonaws.com/documents/graduate-students-and-tuition-tax-benefits.pdf .
  • Joint Committee on Taxation, “Federal Tax Provisions Expired in 2017” (JCX-5-18), March 9, 2018.

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Deduct graduate school on your taxes? It’s possible

People with a master’s degree typically earn about $400,000 more over their lifetime than people with a bachelor’s degree, according to the Census Bureau. Of course, getting a master’s can be very expensive — an average $17,385 per year in tuition and fees alone, according to the National Center for Education Statistics.

Tax pros say certain people might be able to deduct some or even most of graduate school costs

But tax pros say certain people might be able to deduct some or even most of the cost. Here’s what they say you need to know to do it right.

Stay in the same line of work

If you’re hoping to deduct the cost of a master’s degree so you can change careers, think again, says Josh Nowack, a certified public accountant in Irvine, Calif. The IRS has rules for deducting work-related education, he notes. The education has to be required by your employer or by law in order to keep your current salary, position or job status, and it has to have a business purpose for your employer. If the education isn’t required, it must at least maintain or improve the skills needed in your current work.

That means an accountant might get to deduct the cost of a master’s degree in taxation but not the cost of a medical degree, for example, says Kevin Chou, a CPA in Philadelphia who works frequently with clients pursuing a Master of Business Administration degree.

Going back to school to meet minimum requirements for your current trade or business isn’t deductible either, unless the minimum requirements changed after you were hired, according to the IRS. There are special rules for teachers.

There’s one other snag, too, Nowack warns. If the schooling qualifies you for a new trade or business, there’s no deduction. “That’s the No. 1 sticking point,” he says. Whether you actually enter that new trade or business is irrelevant, he says.

» MORE: Not gonna work for you? The Lifetime Learning Credit might.

Keep good records

Tuition, books, supplies, lab fees and even certain transportation costs can be deductible, but personal living expenses typically aren’t, Nowack says. Also, you may not be able to deduct expenses your employer reimburses you for, he notes.

Keep your tuition bills and book receipts, of course, but also keep your transcripts, a copy of your resume and a copy of your employer’s tuition reimbursement policy. They’ll help you make a case for your deductions if you’re audited, Nowack says. Hang onto your admissions essay, too, Chou adds; it can be evidence of your intent to stay in your current field.

You’ll need to use Schedule A, or Schedule C if you’re self-employed, to take the deduction when you file your taxes. For employees, the deduction is the amount greater than 2% of your adjusted gross income, Chou says. If your AGI is $100,000 and your graduate school expenses are $20,000 for the year, for example, only the expenses over $2,000 would be deductible — $18,000, in this case. If you’re self-employed, deduct the expenses from your self-employment income.

Keep time off short

If you quit your job or take a leave of absence to go to school, you still might qualify to take the deduction — so long as you’re not off the job too long. The IRS allows taxpayers a year off from work; more than that is deemed enough time to qualify for a new trade or business, which is a big no-no when it comes to this deduction.

Hire a tax pro

Though recent court cases provide some clarification about the rules, deducting work-related education is still a disputed area of the tax world, so it’s a good idea to consult a tax professional. The audit risk can be high, Nowack warns.

“There are certainly things that are decisively white and decisively black in the tax code. This goes well into the gray,” he says.

Tina Orem is a staff writer at NerdWallet, a personal finance website. Email: [email protected] .

The article Deduct Graduate School on Your Taxes? It’s Possible originally appeared on NerdWallet .

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Education & Work-Related Expenses

May i claim my job-related education expenses as an itemized deduction or an education credit on my tax return.

Generally, you cannot deduct job-related education expenses as an itemized deduction. Certain exceptions apply. See Tax Topic 513, Work-Related Education Expenses . To determine if you qualify for any education credits for the work-related educational expenses you incur, refer to  Publication 970,Tax Benefits for Education  and  Am I Eligible to Claim an Education Credit?  

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  • Are my work-related education expenses deductible?
  • Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) (PDF)
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My employer paid me additional compensation to cover my graduate school tuition and included it on my w-2 as wages. the program improves skills needed in my current field of employment but doesn't qualify me for a new trade or business. can i claim this educational expense on my tax return and, if so, where do i claim the expense.

Because you received the additional compensation as wages, you're treated as paying the tuition yourself out-of-pocket. To determine if you can claim the educational expense, and, if so, where to claim it on your return, review the rules for the lifetime learning credit and for the tuition and fees deduction.

Also review your eligibility for taking the expense as an adjustment to income for a qualified performing artist and/or fee-basis official on your tax return. See the Instructions for Form 1040 (and Form 1040-SR)  or Instructions for Form 1040-NR . You may need to attach Form 2106, Employee Business Expenses . See Publication 970, Tax Benefits for Education  for a full list.

  • Tax Topic 513, Work-related education expenses
  • Publication 463, Travel, Entertainment, Gift and Car Expenses, Chapter 6
  • Am I eligible to claim an education credit?

Last year, my parents and I both took out student loans to pay for my education. We both received Form 1098-E for our separate loans. I wasn't their dependent last year. Can we both claim student loan interest on our tax returns?

No. Your parents cannot claim the deduction for student loan interest on their tax return because you were not their dependent at the time they took out a student loan for you. However, you can claim, subject to certain limitations, the deduction with respect to the loan that you took out for yourself (assuming that you meet the other requirements for this deduction).  

  • Tax Topic 456 - Student Loan Interest Deduction
  • Tax Topic 505 - Interest Expense
  • Can I Claim a Deduction for Student Loan Interest?
  • Publication 970 - Tax Benefits for Education

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  • How to pay for grad school

Federal Tax Breaks for Graduate School & Other Tax Benefits

  • April 6, 2020

Sage Crary

Home Educators Blog

If you paid for educational expenses in 2019, you may be able to save money on your taxes through a variety of different programs. While it’s true that there are slightly more tax break options for your undergraduate degree, there are still a host of programs with tax incentives to help defray the overall cost of obtaining your graduate degree . Check out some of the more common programs below. While we in financial aid hold lots of tax knowledge, we are not certified public accountants, and tax laws can and do change frequently, so check with your personal tax advisor for the best options for you and your family.

American Opportunity Tax Credit

This tax credit is specifically only for undergraduate costs, but if you are coming directly from undergraduate study (or have children of your own who are undergraduates currently) this is typically the ‘best bang for your buck’ program.

Tax credits literally work just as a credit on the amount of taxes you owe, so it’s a dollar for dollar match up to $2,500 per year. Therefore, if your tax liability was assessed at $4,000 for the year, but you had up to $2,500 in qualified undergraduate tuition, fees, books, and equipment, you would only owe $1,500 in taxes and would get a refund of the full $2,500. The American Opportunity Tax Credit can be claimed for up to four years and is eligible for tax filers whose total adjusted gross income is under $80,000 a year ($160,000 for joint filers). You can also receive up to 40% of your American Opportunity Credit as a refund, even if you earned no income or had no tax liability!

Lifetime Learning Credit

The Lifetime Learning Credit is for graduate or undergraduate costs, and there is no limit to the number of years you can claim it. This is an ideal credit for graduate students and is one of the most common types of tax incentives that graduate students take advantage of.

How it works is that you can claim up to 20% of the first $10,000 you paid in tuition and fees in 2019 for a maximum of $2,000. The Lifetime Learning Credit does not count living expenses or transportation as eligible expenses, but you can claim required books in addition to tuition and fees. You can claim the credit on your income taxes if your adjusted gross income was less than $58,000 (or $116,000 if you filed jointly) in 2019. However, the Lifetime Learning Credit is not refundable, so if you did not owe taxes or did not work during 2019, you cannot receive this back as a refund.

Tuition and Fees Deduction

Deductions work differently than credits. Credits are a direct dollar-for-dollar offset of your taxes owed, while a deduction reduces your income. This reduction to income reduces your taxable burden by approximately 15-25% of your deduction amount. So in the case of the tuition and fees deduction , you can deduct (aka reduce) up to $4,000 from your gross income for money you spent on educational expenses, which will in turn reduce your taxes by an average of $600-$1,000. You can deduct up to $4,000 in tuition, fees, books, and supplies that you paid in 2019, and you can qualify if your adjusted gross income is less than $65,000 (or $130,000 if married filing jointly). However, you cannot claim both the tuition and fees deduction and an education tax credit in the same year (it’s one or the other), so consult your tax professional for which one is best for your individual circumstances.

Scholarships and Grants

There is only one scenario in which going to school and receiving financial aid could cost you more in taxes, and that is if your scholarship and grants that you received in a given year are more than the cost of attending school. For example, if you received $10,000 in scholarships and grants (aka free money) but your total bill for tuition, fees, and books was only $6,000, the $4,000 that you received as a refund could be considered taxable income. There are many different nuances to this, so if you are in this situation it’s best for you to reach out to a tax professional directly for one-on-one advice. However, in general, it’s always best to take all the scholarships and grants each year, and if you owe a small amount in taxes, it’s still a much better deal!

College Savings Plans

All the scenarios thus far have been for students who are currently in school and had educational costs in the most recent tax year. However, there are also tax savings to be had if you choose to plan ahead. Many people opt to start a college 529 plan or other type of educational savings plan. For these accounts, the interest earned grows tax-free, as the money deposited into the account has already been taxed. Then when the money is used for qualified educational expenses, there are no tax penalties. It’s basically like a ROTH IRA, but for education costs! These accounts are special investment accounts and need to be set up by your investment specialist, but it’s another great way to curb the cost of education and ensure you are getting the most out of your money.

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What Education Expenses Are Tax-Deductible in 2024?

Jesus Morales-Grace, EA

Jesus Morales is an Enrolled Agent and has 7 years of bookkeeping and tax experience. He enjoys hiking, traveling, and studying tax law.

Are you spending money to advance your skills or keep up with your field? Good news: That could be a deduction.

Rules for claiming education expenses

Here are the IRS’s guidelines for tax-deductible education expenses.

✓ It allows you to maintain or improve your job skills

Over time, there are updates to the tools, software, and processes you use to do your work. To stay competitive, you need to maintain your level of skill -- and improve on what you already offer.

Training that helps you do this is tax-deductible. That goes for classes and self-study programs.

For example, say you pay for a class that walks you through massive updates to the software you use to provide design services. That counts as maintaining your skills.

Another example: if you take a class for a new program you want to start using for your design work, that counts as improving your skills.

Either way, the IRS will recognize your class as a deductible business expense.

✓ It's required by law to maintain your status

Some professions are required by law to complete continuing education.

For example, a real estate agent in California needs to complete multiple hours of continuing education between license renewal periods. Not meeting this requirement may mean you won’t be able to work.

Since this is required by law, the IRS will allow it as a deduction.

✓ It's related to your current business

The education you’re paying for has to be directly related to the work you’re doing now . It can't qualify you for a new line of work.

A delivery driver , for instance, can’t deduct a class on investigative journalism. But a reporter can.

This rule can be tricky. Say you're a freelance web developer, and you want to take a sales class so you can better sell your services. Even if you have no intention of becoming a salesperson, the IRS may disallow this deduction.

Why? Because your new sales skills could qualify you for a new business, even if that wasn't your intention.

✘ It isn't to "establish" a new business

Speaking of which, the IRS doesn’t allow deductions for educational expenses that help you meet the “minimum requirements” to offer services in a new field. 

A DoorDasher wouldn’t be able to write off drivers ed. And someone who wants to be a software engineer can’t write off their first coding course.

What education expenses are tax-deductible?

We’ve been talking mostly about classes. But other types of expenses can qualify too. Here are the basic categories you should look out for:

  • 📖 Course-related books, supplies, and transportation
  • 💳 License renewal fees
  • 📰 Industry magazine subscriptions
  • 🎧 Podcast subscriptions

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Now, let's go over some examples of tax-deductible educational expenses.

School tuition

If you are working toward a part-time degree while freelancing, then you might be able to claim your tuition (and other associated fees.) For example, you might be a freelance consultant going to college on the side.

Just remember: To claim your tuition, you have to already be freelancing in a field related to your degree.

Here is our guide to carrying losses forward for educational expenses on your income tax.

Online web development course

Let’s say you’re a freelance designer who creates branding and marketing assets for small businesses. You start a Coursera course so you can add web design to your roster of services.

That’s considered work-related education, and it's tax-deductible.

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Real estate license renewal

Some industries — like real estate — require licenses or certifications to be periodically renewed. All those fees are tax-deductible.

Just remember: You have to be working in that field right now . The costs associated with getting your real estate license the first time around can’t be written off.

Wall Street Journal subscription

A news subscription can be an effective way to stay up to date with your industry. If it helps you with client small talk and ensures that you sound professional at meetings and conferences, it’s a write-off!

Improv class

If you do a lot of public speaking over the course of your freelance work, an improv class can help you loosen up and feel more comfortable on the job. That means you can deduct the class from your tax bill.

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Another tax break for your educational expenses

You can't always claim your education expenses as a business deduction. But there's another tax break you might be able to claim.

Enter the Lifetime Learning Credit. You can use it to pay for courses at a college, university, or trade school.

The Lifetime Learning Credit is worth up to $2,000 per tax return. It comes with a gross income limit of $69,000 (or $138,000, if you file jointly).

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Is Graduate School Tuition Tax-Deductible?

Mark Kennan

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Graduate school tuition can be a deductible education expense under the tuition and fees deduction if you meet the criteria. To qualify, you must pay the tuition for yourself, your spouse or your dependent. Your income cannot exceed the annual limits. Payments must be for tuition and fees, not for other expenses like room, board, travel or personal expenses. Regardless of how much your tuition costs, your deduction is limited to $4,000 per year.

Lifetime Learning Credit

Instead of deducting your graduate school tuition, you may save more on your income taxes if you claim the lifetime learning credit instead. The lifetime learning credit has the same requirements, but the income cutoff for those eligible to take it is lower. It gives you a tax credit equal to 20 percent of your first $10,000 of expenses, for a maximum tax credit of $2,000.

Comparing Your Savings

To determine which approach will save you more on your federal income taxes, you need to know your marginal income tax rate. To figure your savings for using the tuition and fees deduction, multiply your marginal tax rate by your deduction, up to the $4,000 maximum, and compare the result with the value of your lifetime learning credit. For example, assume you are in the 15 percent tax bracket and have $7,000 of graduate school tuition. If you claim the tuition and fees deduction, you save $600 ($4,000 times 15 percent). If you claim the lifetime learning credit, you save $1,400 ($7,000 times 20 percent).

  • IRS.gov: Publication 970
  • Georgia State University: Marginal Tax Rates
  • Internal Revenue Service. "Extended and Expired Legislation." Accessed Oct. 26, 2020.
  • USA.gov. "Tax Law Changes." Accessed Oct. 26, 2020.
  • Internal Revenue Service. "Questions and Answers About the 2018 Form 1040." Accessed Oct. 26, 2020.
  • Internal Revenue Service. "Be Tax Ready – Understanding Tax Reform Changes Affecting Individuals and Families." Accessed Oct. 26, 2020.
  • Internal Revenue Service. "Form 8917 Tuition and Fees Deduction," Page 2. Accessed Oct. 26, 2020.
  • Internal Revenue Service. "Compare Education Credits and Tuition and Fees Deduction." Accessed Oct. 26, 2020.
  • Internal Revenue Service. "File Form 1040-X to Amend a Tax Return." Accessed Oct. 26, 2020.

Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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Estimated Cost of Attendance (Tuition and Fees)

Related content, related resources.

  • Omaha Urban Rate (OUR) Tuition
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The University of Nebraska Omaha (UNO) is proud to offer some of the most competitive tuition rates in the region.

Below is an estimated cost for Nebraska Residents, Out-of-State Residents, and the Omaha Urban Rate (OUR) Tuition . OUR tuition is reduced tuition for residents of some of Nebraska's surrounding states.

  • Undergraduate Students
  • Graduate Students

Estimated Cost for Undergraduate Students

(fall 2023, spring 2024 semesters).

This information is based on full-time enrollment of 27 credit hours or more for the nine-month academic year.

All total costs of attendance include: tuition and fees, room and board, books and supplies, and estimated personal expenses.

  • Students are not required to live on campus.
  • Housing and food costs are an estimate. Meal plans are not required to live on campus, except for Scott Hall.
  • Personal expenses include items such as clothing, personal hygiene, recreation, and loan fees.

Living On-Campus

Living off-campus, living at home (with parent/relative), online tuition and other fees.

Online tuition, full tuition rates, and fees can be found at Cashiering and Student Accounts .

Undergraduate Student Online Rates

Graduate Student Online Rates

Estimated Cost for Graduate Students

The information below is based on full-time enrollment of 18 credit hours or more for the nine-month academic year.

All total costs of attendance include tuition and fees, room and board, books and supplies, and estimated personal expenses.

/images/cornell/logo35pt_cornell_white.svg" alt="write off graduate school tuition"> Cornell University --> Graduate School

2023-24 stipend rates, 2023-24 graduate student assistantship and fellowship stipend rates.

Effective August 21, 2023  ( View 2024-25 rates )

[1] Weekly hours spent on summer appointments must comply with University Policy 1.3, and stipend rates must meet the Board of Trustees mandated minimum (nine-month) stipend rate, prorated for the number of weeks of the summer appointment. The length of the summer appointment (number of weeks) is determined by the Principal Investigator, department, unit, college, or other source of funding.

[2] The maximum academic-year stipend amount that a graduate student may receive when any portion of the stipend comes from any funds held at Cornell (university accounts, college accounts, department accounts, unit accounts, or Principal Investigator sponsored funds) is $49,824. The increase may be from the same funding source as the basic stipend (an “adjustment”) or from a different source (a “supplement”). The limit applies to support from any combination of fellowships or assistantships when part of the stipend is paid from funds held at Cornell. There is no restriction on summer stipends and fellowships.

Prorated Stipends for Non-Standard Appointments

Minimum stipend rates for non-standard appointments classified as graduate assistantships (TA, GA, RA, or GRA) must be proportional to the board-approved stipend. Examples are provided in the table below.

Partial assistantships must include tuition proportional to the stipend. That is, if a student receives a partial TAship with 50% stipend for the semester, the hours must be limited to 7.5 or less per week and he or she must receive 50% tuition for that semester in addition to the stipend. Awards that do not provide tuition and stipend in amounts proportional to the hours expected of a regular assistant are not assistantships and should not be portrayed as such.

Examples – Adjusted Stipend Rates for Non-Standard Appointments

Assistantships for professional degree students.

Students who are enrolled in professional degree programs are generally ineligible for assistantships outside of their graduate field of study, unless the director of graduate studies for the student’s program requests an exception based on the student gaining experience directly supporting the student’s ability to teach the subject matter of the profession. Requests for exceptions must be approved in advance by both the dean of the Graduate School and the dean of the college in which the professional degree program is housed. The college that administers the professional degree in which the student is enrolled is responsible for payment of the full tuition. Professional degree students may be appointed as graduate teaching/research specialists (GTRS) (see below). They may not accept an assistantship without:

  • A signed letter from the director of graduate studies for the student’s program requesting an exception based on the student gaining experience directly supporting the student’s ability to teach the subject matter of the profession.
  • A signed letter from the student’s college dean or dean’s designate indicating that the college will apply a tuition credit of at least $14,750 per semester.
  • A signed letter from the Graduate School Dean or Associate Dean of Administration, approving the assistantship appointment.

Graduate Teaching/Research Specialists 

Students in the professional degree programs may be appointed as graduate teaching/research specialists (GTRS). The GTRS is not an assistantship; GTRSs receive a stipend in proportion to the percent time of their appointment as compared to a full-time graduate assistantship but not tuition and health insurance. Hours are limited to no more than 10 per week. Before a program may begin using the GTRS title, approval must be given by the Graduate School.

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COMMENTS

  1. Tuition and Fees Deduction for Higher Education

    It allows you to deduct up to $4,000 from your income for qualifying tuition expenses paid for you, your spouse, or your dependents.

  2. Qualified Ed Expenses

    Qualified education expenses must be paid by: You or your spouse if you file a joint return, A student you claim as a dependent on your return, or A third party including relatives or friends. Funds Used You can claim an education credit for qualified education expenses paid by cash, check, credit or debit card or paid with money from a loan.

  3. Can you deduct graduate degree program tuition expenses?

    The credit is allowed on qualifying education up to $10,000. The credit will phase out with a modified adjusted gross income of $80,000 to $90,000 ($160,000 to $180,000 for Married Filing Joint) taxpayers. The maximum credit per taxpayer would be a non-refundable $2,000 credit when allowed. New York State Treatment

  4. Which College Education Expenses Are Tax Deductible

    Prior to 2021, you could generally claim the tuition and related expenses deduction if you paid qualifying education expenses for higher education, paid the education expense for an eligible student, and the eligible student was you, your spouse, or your dependent.

  5. Educational Tax Credits and Deductions You Can Claim for Tax Year 2022

    Feb. 13, 2023, at 9:36 a.m. Getty Images If you're paying back student loans, you may be able to deduct up to $2,500 in interest. College is expensive, but there are several valuable tax breaks...

  6. 2024 College Tuition Tax Deductions

    To get the full $2,500 credit, your MAGI cannot be higher than $91,850 (or over $137,800 for joint filers) in 2024. The LLC, on the other hand, is a nonrefundable tax credit. This means that you can't get a refund if the credit lowers your tax liability to an amount below zero. So you're better off claiming the AOTC.

  7. Tax Benefits for Education: Information Center

    Credits. An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit.

  8. Is college tuition tax deductible? Yes, it can be

    Americans can write off qualified college tuition and other education costs on their 2022 tax returns. That means if you covered any of the costs of a degree program for yourself, your spouse, or ...

  9. How to Deduct MBA Tuition on Your Taxes

    • Claiming tuition as a deduction on your individual tax return: "To qualify, you have to pay for the tuition yourself, it can't have been paid with tax-free scholarships or grants," says Josh...

  10. Qualified education expenses: What can you deduct?

    Qualified education expenses primarily include tuition, but also costs that are required for you to enroll in a course or program. You will probably receive a copy of Form 1098-T from each school where you have eligible expenses. The tuition and fees deduction, available to all taxpayers, allows you to deduct up to $4,000.

  11. Education Tax Credits and Deductions You Can Claim for 2023

    You can get the full education tax credit if your modified adjusted gross income, or MAGI, was $80,000 or less in 2023 ($160,000 or less if you file your taxes jointly with a spouse). If your MAGI ...

  12. Yes, there really is a tax break for upper-income graduate ...

    Tax filers can deduct up to $4,000 of tuition and fees paid for higher education in the tax year. It is an "above-the-line" deduction, meaning filers can claim it without having to itemize...

  13. Deduct graduate school on your taxes? It's possible

    If your AGI is $100,000 and your graduate school expenses are $20,000 for the year, for example, only the expenses over $2,000 would be deductible — $18,000, in this case. If you're...

  14. Education & Work-Related Expenses

    Help Frequently Asked Questions Education & Work-Related Expenses Education & Work-Related Expenses May I claim my job-related education expenses as an itemized deduction or an education credit on my tax return? My employer paid me additional compensation to cover my graduate school tuition and included it on my W-2 as wages.

  15. Tax Benefits for the Graduate Student

    Tuition and Fees Deduction for Graduate Students. The Tuition and Fees Deduction allows you to claim up to $4,000 per tax year for graduate students with a MAGI of $65,000 or less. Graduate students who have an MAGI between $65,000 and $80,000 may claim up to $2,000 tax deduction. Any graduate student or their parent can claim the Tuition and ...

  16. Federal Tax Breaks for Graduate School & Other Tax Benefits

    You can deduct up to $4,000 in tuition, fees, books, and supplies that you paid in 2019, and you can qualify if your adjusted gross income is less than $65,000 (or $130,000 if married filing jointly).

  17. What Education Expenses Are Tax-Deductible in 2024?

    January 2, 2024 Are you spending money to advance your skills or keep up with your field? Good news: That could be a deduction. Contents Rules for claiming education expenses What education expenses are tax-deductible? Another tax break for your educational expenses Rules for claiming education expenses

  18. Can You Write Off Your Graduate School Tuition?

    Can You Write Off Your Graduate School Tuition? By Stephanie Faris Reviewed by Catreal Wood, B.A. in Finance Updated November 08, 2018 ••• An advanced degree will be good for your resume, which could very well translate to higher earnings. But higher earnings also mean the Internal Revenue Service will be able to take more money at tax time.

  19. Is Graduate School Tuition Tax-Deductible?

    Graduate school tuition can be a deductible education expense under the tuition and fees deduction if you meet the criteria. To qualify, you must pay the tuition for yourself, your spouse or your dependent. Your income cannot exceed the annual limits.

  20. Tax tips for grad students

    Two credits and deductions to consider are: The Lifetime Learning Credit, which refunds 20 percent of up to $10,000 of qualified expenses, providing students with up to $2,000. The Tuition and Fees Deduction, which allows students to deduct up to $4,000 of qualified higher education expenses. The IRS defines qualified higher education expenses ...

  21. Can You Deduct Your Child's Tuition from Taxes?

    For example, if you made $80,000 in gross income in a given year and had $15,000 in deductions, you'd have $65,000 in taxable income. A tax credit, on the other hand, can help provide a dollar-for-dollar reduction in income taxes you owe. For example, a $2,000 tax credit would reduce your tax bill by $2,000. When compared dollar for dollar ...

  22. How To Pay For Grad School

    The program will pay up to $7,000 per year toward the student's tuition and fees. However, the award converts to a loan if the student doesn't meet obligations. To find out if you're ...

  23. Solved: Can I write off expenses for graduate school ...

    1 Best answer HelenaC New Member No, graduate school applications and traveling expenses for interviews, are not Qualified Education Expenses, per Publication 970, Tax Benefits for Education - IRS.gov . Here are examples of what you can and can't deduct: Generally, you can deduct: Tuition Enrollment fees

  24. Estimated Cost of Attendance (Tuition and Fees)

    The University of Nebraska Omaha (UNO) is proud to offer some of the most competitive tuition rates in the region. The cost of attendance is the estimated full and reasonable cost of completing an academic year as a full-time student. ... Graduate Student Online Rates. Estimated Cost for Graduate Students (Fall 2023, Spring 2024 Semesters)

  25. 2023-24 Stipend Rates : Graduate School

    The GTRS is not an assistantship; GTRSs receive a stipend in proportion to the percent time of their appointment as compared to a full-time graduate assistantship but not tuition and health insurance. Hours are limited to no more than 10 per week. Before a program may begin using the GTRS title, approval must be given by the Graduate School.