Tax credits are better than tax deductions. The IRS offers several ways to save on your tax bill if you paid for college this year. The best ways are one of the two Education tax credits, the American Opportunity Tax Credit or the Lifetime Learning Tax Credit. These are not automatic, however, so not every taxpayer is eligible. For those not eligible for education tax credits, there’s the Tuition and Fees Deduction, available by filling out IRS Form 8917.
What is the Tuition & Fees Deduction?
If you paid tuition at a college for you or a dependent, you can get a tax deduction from the IRS. The tuition must be for you as the student or someone you claim as a dependent on your federal income tax return. The courses must be at approved a post-secondary (college level) school, and fees must be fees that are required for enrollment.
You cannot submit IRS Form 8917 for the tuition & fees deduction if you also filled out IRS form 8863, Education Credits. It’s either the credit or the deduction but not both.
Can you pay athletic fees and get a deduction on IRS form 8917? No. How about room & board? No. Student health fees? Again, no. The Tuition & Fees Deduction is for tuition and fees that are required to enroll in classes. The fees must be paid directly to the college, also. Books that are required for classes do not count unless the college makes you buy them from the college.
If you take a college course in volleyball, you cannot submit IRS form 8917 for this course unless you are majoring something sports related and the volleyball course is part of your degree. This is true even if that volleyball course is a for-credit class (what kind of college…never mind).
If you get scholarships that are tax-free, you will have to adjust your education expenses on IRS form 8917 because the scholarship reduces your actual expenses.
For the complete story on IRS Form 8917 see the actual IRS website here.