Educator
expenses. The
provision for educator expenses
was to have expired at the end
of 2003, but the Working
Families Tax Relief Act of 2004
extended this provision until
the end of 2005. You can deduct
up to $250 of qualified expenses
as an adjustment to gross income
in 2004 and 2005. See
Educator Expenses
for more information.
Student loan
interest deduction. Final
regulations, issued May 7, 2004,
made the following changes to
the rules for deducting student
loan interest. These changes
apply to interest due and paid
on qualified student loans after
December 31, 1997.
Longer
period allowed for loan
disbursement. The 60-day
safe harbor for disbursing loan
proceeds used to pay qualified
education expenses has been
increased to 90 days before and
90 days after the academic
period to which the expenses
relate. See
Reasonable period of time
for more information.
Interest paid by a third party
may be deductible. The
person legally obligated to make
interest payments on a student
loan may be able to deduct
interest payments on that loan
made by someone else (third
party). For more information,
see
Expenses paid by others.
If you are affected by
either of these changes, you may
want to file Form 1040X, Amended
U.S. Individual Income Tax
Return, to correct a return you
have already filed. Generally,
you must file your claim for a
refund within 3 years after the
date you filed your original
return or within 2 years after
the date you paid the tax,
whichever is later.
Maximum
tuition and fees deduction
increases to $4,000. Beginning
in 2004, the amount of qualified
education expenses you can take
into account in figuring your
tuition and fees deduction
increases from $3,000 to $4,000
if your modified adjusted gross
income (MAGI) is not more than
$65,000 ($130,000 if you are
married filing jointly). If your
MAGI is larger than $65,000
($130,000), but is not more than
$80,000 ($160,000 if you are
married filing jointly), your
maximum tuition and fees
deduction is $2,000. No tuition
and fees deduction is allowed if
your MAGI is larger than $80,000
($160,000).
Introduction
This chapter discusses the
education-related adjustments
you can deduct in figuring your
adjusted gross income.
This chapter covers:
Educator expenses,
Student loan
interest deduction, and
The tuition and fees
deduction.
Useful Items - You
may want to see:
Publication
970
Tax Benefits for
Education
Educator Expenses
If you were an eligible
educator in 2004, you can deduct
up to $250 of qualified expenses
you paid in 2004. If you and
your spouse are filing jointly
and both of you were
eligible educators, the maximum
deduction is $500. However,
neither spouse can deduct more
than $250 of his or her
qualified expenses.
Eligible
educator. An eligible
educator is a kindergarten
through grade 12 teacher,
instructor, counselor,
principal, or aide in a
school for at least 900
hours during a school year.
Qualified
expenses. Qualified
expenses include ordinary
and necessary expenses paid
in connection with books,
supplies, equipment
(including computer
equipment, software, and
services), and other
materials used in the
classroom. An ordinary
expense is one that is
common and accepted in your
educational field. A
necessary expense is one
that is helpful and
appropriate for your
profession as an educator.
An expense does not have to
be required to be considered
necessary.
Qualified expenses do not
include expenses for home
schooling
or for nonathletic
supplies for courses in
health or physical
education.
You must reduce your
qualified expenses by the
following amounts.
Tax-free
interest on U.S.
series EE and I
savings bonds (Form
8815). See
Figuring the
Tax-Free Amount
in chapter 10 of
Publication 970.
Tax-free portion
of a distribution
from a qualified
tuition program
(QTP). See
Figuring the
Taxable Portion of a
Distribution
in chapter 8 of
Publication 970.
Tax-free portion
of a distribution
from a Coverdell
education savings
account (ESA). See
Figuring the
Taxable Portion of a
Distribution
in chapter 7 of
Publication 970.
Any
reimbursements you
received for these
expenses that were
not reported to you
in box 1 of your
Form W-2.
How the
deduction is claimed.
To claim the deduction,
enter the allowable amount
on line 23 of Form 1040, or
line 16 of Form 1040A.
Student Loan
Interest Deduction
Generally, personal interest
you pay, other than certain
mortgage interest, is not
deductible on your tax return.
However, if your modified
adjusted gross income (MAGI) is
less than $65,000 ($130,000 if
filing a joint return) there is
a special deduction allowed for
paying interest on a student
loan (also known as an education
loan) used for higher education.
For most taxpayers, MAGI is the
adjusted gross income as figured
on their federal income tax
return before subtracting any
deduction for student loan
interest. This deduction can
reduce the amount of your income
subject to tax by up to $2,500
in 2004. Table 21-1 summarizes
the features of the student loan
interest deduction.
Table 21-1.
Student Loan
Interest Deduction
at a Glance
Do not rely on
this table alone.
Refer to the text
for more details.
Feature
Description
Maximum benefit
You can decrease
your income subject
to tax by up to
$2,500.
Loan qualifications
Your student loan
•
must have been taken
out solely to pay
qualified education
expenses, and
•
cannot be from a
related person or
made under a
qualified employer
plan.
Student
qualifications
The student must be
•
you, your spouse, or
your dependent, and
•
enrolled at least
half-time in a
degree program.
Time limit on
deduction
You can deduct
interest paid during
the remaining period
of your student
loan.
Phaseout
The amount of your
deduction depends on
your income level.
Student Loan
Interest Defined
Student loan interest is
interest you paid during the
year on a qualified student
loan. It includes both
required and voluntary
interest payments.
Qualified
Student Loan
This is a loan you
took out solely to pay
qualified education
expenses (defined later)
that were:
For you,
your spouse, or
a person who was
your dependent
(defined in
chapter 3) when
you took out the
loan,
Paid or
incurred within
a reasonable
period of time
before or after
you took out the
loan, and
For
education
provided during
an academic
period for an
eligible
student.
Loans from the
following sources are
not qualified student
loans.
A related
person.
A qualified
employer plan.
Reasonable period of
time.
Qualified
education expenses
are treated as paid
or incurred within a
reasonable period of
time before or after
you take out the
loan if they are
paid with the
proceeds of student
loans that are part
of a federal
postsecondary
education loan
program.
Even if not paid
with the proceeds of
that type of loan,
the expenses are
treated as paid or
incurred within a
reasonable period of
time if both of the
following
requirements are
met.
The
expenses
relate to a
specific
academic
period, and
The loan
proceeds are
disbursed
within a
period that
begins 90
days before
the start of
that
academic
period and
ends 90 days
after the
end of that
academic
period.
If neither of the
above situations
applies, the
reasonable period of
time usually is
determined based on
all the relevant
facts and
circumstances.
Academic period.
An academic period
includes a semester,
trimester, quarter,
or other period of
study (such as a
summer school
session) as
reasonably
determined by an
educational
institution. In the
case of an
educational
institution that
uses credit hours or
clock hours and does
not have academic
terms, each payment
period can be
treated as an
academic period.
Eligible student.
This is a student
who was enrolled at
least half-time in a
program leading to a
degree, certificate,
or other recognized
educational
credential.
Enrolled at
least half-time.
A student was
enrolled at least
half-time if the
student was taking
at least half the
normal full-time
work load for his or
her course of study.
The standard for
what is half of the
normal full-time
work load is
determined by each
eligible educational
institution.
However, the
standard may not be
lower than any of
those established by
the Department of
Education under the
Higher Education Act
of 1965.
Loan from a related
person. You
cannot deduct
interest on a loan
you get from a
related person.
Related persons
include:
Your
spouse,
Your
brothers and
sisters,
Your
half
brothers and
half
sisters,
Your
ancestors
(parents,
grandparents,
etc.),
Your
lineal
descendants
(children,
grandchildren,
etc.), and
Certain
corporations,
partnerships,
trusts, and
exempt
organizations.
Loan from a
qualified employer
plan. You
cannot deduct
interest on a loan
made under a
qualified employer
plan or under a
contract purchased
under such a plan.
Qualified
Education
Expenses
Generally, for
purposes of the student
loan interest deduction,
these expenses are the
total costs of attending
an eligible educational
institution, including
graduate school. They
include amounts paid for
the following items.
Tuition and
fees.
Room and
board.
Books,
supplies, and
equipment.
Other
necessary
expenses (such
as
transportation).
The cost of room and
board qualifies only to
the extent that it is
not more than the
greater of the following
amounts.
The
allowance for
room and board,
as determined by
the eligible
educational
institution,
that was
included in the
cost of
attendance (for
federal
financial aid
purposes) for a
particular
academic period
and living
arrangement of
the student.
The actual
amount charged
if the student
is residing in
housing owned or
operated by the
eligible
educational
institution.
Eligible educational
institution.
An eligible
educational
institution is any
college, university,
vocational school,
or other
postsecondary
educational
institution eligible
to participate in a
student aid program
administered by the
Department of
Education. It
includes virtually
all accredited,
public, nonprofit,
and proprietary
(privately owned
profit-making)
postsecondary
institutions.
Certain
educational
institutions located
outside the United
States also
participate in the
U.S. Department of
Education's Federal
Student Aid (FSA)
programs. See
chapter 4 of
Publication 970 for
more information.
For purposes of
the student loan
interest deduction,
an eligible
educational
institution also
includes an
institution
conducting an
internship or
residency program
leading to a degree
or certificate from
an institution of
higher education, a
hospital, or a
health care facility
that offers
postgraduate
training.
An educational
institution must
meet the above
criteria only during
the academic
period(s) for which
the student loan was
incurred. The
deductibility of
interest on the loan
is not affected by
the institution's
subsequent loss of
eligibility.
The
educational
institution should
be able to tell you
if it is an eligible
educational
institution.
Adjustments to
qualified education
expenses. You
must reduce your
qualified education
expenses by certain
tax-free items (such
as the tax-free part
of scholarships and
fellowships). See
chapter 4 of
Publication 970 for
details.
Include As
Interest
In addition to simple
interest on the loan,
certain loan origination
fees, capitalized
interest, interest on
revolving lines of
credit, and interest on
refinanced student loans
can be student loan
interest if all other
requirements are met.
Loan origination
fee. This is a
one-time fee charged
by the lender for
the use of money,
which is treated as
interest accrued
over the life of the
loan. This payment
cannot be for
property or services
provided by the
lender, such as
commitment fees or
processing costs.
Capitalized
interest.
This is unpaid
interest on a
student loan that is
added by the lender
to the outstanding
principal balance of
the loan.
Interest on
revolving lines of
credit. This
interest, which
includes interest on
credit card debt, is
student loan
interest if the
borrower uses the
line of credit
(credit card) only
to pay qualified
education expenses.
See
Qualified
Education Expenses,
earlier.
Interest on
refinanced student
loans. This
includes interest on
both:
Consolidated
loans—loans
used to
refinance
more than
one student
loan of the
same
borrower,
and
Collapsed
loans—two or
more loans
of the same
borrower
that are
treated by
both the
lender and
the borrower
as one loan.
If you refinance
a qualified student loan
for more than your
original loan and you
use the additional
amount for any purpose
other than qualified
education expenses, you
cannot deduct any
interest paid on the
refinanced loan.
Voluntary interest
payments.
These are payments
made on a qualified
student loan during
a period when
interest payments
are not required,
such as when the
borrower has been
granted a deferment
or the loan has not
yet entered
repayment status.
Do Not
Include As
Interest
You cannot claim a
student loan interest
deduction for:
Interest you
paid on a loan
if under the
terms of the
loan, you are
not legally
obligated to
make interest
payments.
Loan
origination fees
that are
payments for
property or
services
provided by the
lender, such as
commitment fees
or processing
costs.
Can You
Claim the
Deduction
Generally, you can claim
the deduction if all four of
the following requirements
are met.
Your filing
status is any filing
status except
married filing
separately.
No one else is
claiming an
exemption for you on
his or her tax
return.
Your modified
adjusted gross
income (MAGI) is
less than $65,000
($130,000 if you
file a joint
return). For details
on figuring your
MAGI, see chapter 4
of Publication 970.
You paid
interest on a
qualified student
loan.
Expenses paid by others.
If you are the person
legally obligated to
make interest payments
and someone else makes a
payment of interest on
your behalf, you are
treated as receiving the
payments from the other
person and, in turn,
paying the interest. See
chapter 4 of Publication
970 for more
information.
No Double
Benefit
Allowed
You cannot deduct as
interest on a student
loan any amount you can
deduct under any other
provision of the tax law
(for example, home
mortgage interest).
Who Can
Claim a
Dependent's
Expenses
You can deduct interest
paid on a student loan for
your dependent only if you:
Are legally
obligated to make
the interest
payments,
Actually made
the payments during
the tax year, and
Claim an
exemption for your
dependent on your
tax return.
You are not considered to
have made student loan
interest payments actually
made by your dependent,
regardless of whether your
dependent is legally liable
for the loan.
How Much Can
You Deduct
Your student loan
interest deduction for 2004
is generally the smaller of:
$2,500, or
The interest you
paid in 2004.
The amount determined
above is phased out
(gradually reduced) if your
MAGI is between $50,000 and
$65,000 ($100,000 and
$130,000 if you file a joint
return). You cannot take a
student loan interest
deduction if your MAGI is
$65,000 or more ($130,000 or
more if you file a joint
return). For details on
figuring your MAGI, see
chapter 4 of Publication
970.
How Do You
Figure the
Deduction
Generally, you figure the
deduction using the Student
Loan Interest Deduction
Worksheet in the Form 1040
or Form 1040A instructions.
However, if you are filing
Form 2555, 2555-EZ, or 4563,
or you are excluding income
from sources within Puerto
Rico, you must complete
Worksheet 4-1 in chapter 4
of Publication 970.
To help you figure your
student loan interest
deduction, you should
receive Form 1098-E,
Student Loan Interest
Statement. Generally, an
institution (such as a bank
or governmental agency) that
received interest payments
of $600 or more during 2004
on one or more qualified
student loans must send Form
1098-E (or acceptable
substitute) to each borrower
by January 31, 2005.
For qualified student
loans taken out before
September 1, 2004, the
institution is required to
include on Form 1098-E only
payments of stated interest.
Other interest payments,
such as certain loan
origination fees and
capitalized interest, may
not appear on the form you
receive. However, if you pay
qualifying interest that is
not included on Form 1098-E,
you can also deduct those
amounts. For information on
allocating payments between
interest and principal, see
chapter 4 of Publication
970.
To claim the deduction,
enter the allowable amount
on line 26 (Form 1040), or
line 18 (Form 1040A).
Tuition and Fees
Deduction
You may be able to deduct
qualified education expenses
paid during the year for
yourself, your spouse, or a
dependent. You cannot claim this
deduction if your filing status
is married filing separately or
if another person can claim an
exemption for you as a dependent
on his or her tax return. The
qualified expenses must be for
higher education, as explained
later under
What
Expenses Qualify.
The tuition and fees
deduction can reduce your income
subject to tax by up to $4,000.
It is available through 2005.
Table 21-2 summarizes the
features of the tuition and fees
deduction.
You may be able to take a
credit for your education
expenses instead of a deduction.
You can choose the one that will
give you the lower tax. See
chapter 37 for details about the
credit.
Can You
Claim the
Deduction
The following rules will
help you determine if you
can claim the tuition and
fees deduction.
Who Can
Claim the
Deduction
Generally, you can
claim the tuition and
fees deduction if all
three of the following
requirements are met.
You paid
qualified
education
expenses of
higher
education.
You paid the
education
expenses for an
eligible
student.
The eligible
student is
yourself, your
spouse, or a
dependent for
whom you claim
an exemption
(defined in
chapter 3) on
your tax return.
Qualified education
expenses are defined in
the next column under
What Expenses
Qualify.
Eligible students are
defined later under
Who Is an Eligible
Student.
Who Cannot
Take the
Deduction
You cannot take the
tuition and fees
deduction if any of the
following apply.
Your filing
status is
married filing
separately.
Another
person can claim
an exemption for
you as a
dependent on his
or her tax
return. You
cannot take the
deduction even
if the other
person does not
actually claim
that exemption.
Your
modified
adjusted gross
income (MAGI) is
more than
$80,000
($160,000 if
filing a joint
return).
You were a
nonresident
alien for any
part of the year
and did not
elect to be
treated as a
resident alien
for tax
purposes. More
information on
nonresident
aliens can be
found in
Publication 519,
U.S. Tax Guide
for Aliens.
You or
anyone else
claims a Hope or
lifetime
learning credit
in 2004 with
respect to
expenses of the
student for whom
the qualified
education
expenses were
paid.
Table 21-2.
Tuition
and Fees
Deduction at
a Glance
Do not
rely on this
table alone.
Refer to the
text for
more
details.
Question
Answer
What is the
maximum
benefit?
You can
decrease
your income
subject to
tax by up to
$4,000.
Where is the
deduction
taken?
As an
adjustment
to income on
Form 1040,
line 23, or
1040A, line
16.
For whom
must the
expenses be
paid?
A student
enrolled in
an eligible
educational
institution
who is
either:
•you,
•your
spouse, or
•your
dependent
for whom you
claim an
exemption.
What tuition
and fees are
deductible?
Tuition
and fees
required for
enrollment
or
attendance
at an
eligible
postsecondary
educational
institution,
but not
including
personal,
living, or
family
expenses,
such as room
and board.
What
Expenses Qualify
The tuition and fees
deduction is based on
qualified education expenses
you pay for yourself, your
spouse, or a dependent for
whom you claim an exemption
on your tax return.
Generally, the deduction is
allowed for qualified
education expenses paid in
2004 in connection with
enrollment at an institution
of higher education during
2004 or for an academic
period (defined earlier
under Student Loan Interest
Deduction)
beginning in 2004 or in the
first 3 months of 2005.
Payments with borrowed
funds. You can
claim a tuition and fees
deduction for qualified
education expenses paid
with the proceeds of a
loan. You use the
expenses to figure the
deduction for the year
in which the expenses
are paid, not the year
in which the loan is
repaid. Treat loan
payments sent directly
to the educational
institution as paid on
the date the institution
credits the student's
account.
Student
withdraws from
class(es). You can
claim a tuition and fees
deduction for qualified
education expenses not
refunded when a student
withdraws.
Qualified
Education
Expenses
For purposes of the
tuition and fees
deduction, qualified
education expenses are
tuition and certain
related expenses
required for enrollment
or attendance at an
eligible educational
institution.
Eligible educational
institution.
An eligible
educational
institution is any
college, university,
vocational school,
or other
postsecondary
educational
institution eligible
to participate in a
student aid program
administered by the
Department of
Education. It
includes virtually
all accredited,
public, nonprofit,
and proprietary
(privately owned
profit-making)
postsecondary
institutions. The
educational
institution should
be able to tell you
if it is an eligible
educational
institution.
Certain
educational
institutions located
outside the United
States also
participate in the
U.S. Department of
Education's Federal
Student Aid (FSA)
programs. See
chapter 6 of
Publication 970 for
more information.
Related expenses.
Student-activity
fees and fees for
course-related
books, supplies, and
equipment are
included in
qualified education
expenses only if the
fees and expenses
must be paid to the
institution as a
condition of
enrollment or
attendance.
No Double
Benefit
Allowed
You cannot do any of
the following.
Deduct
qualified
education
expenses you
deduct under any
other provision
of the law, for
example, as a
business
expense,
Deduct
qualified
education
expenses for a
student on your
income tax
return if you or
anyone else
claims a Hope or
lifetime
learning credit
for that same
student in the
same year,
Deduct
qualified
education
expenses that
have been used
to figure the
tax-free portion
of a
distribution
from a Coverdell
education
savings account
(ESA) or a
qualified
tuition program
(QTP). For a
QTP, this
applies only to
the amount of
tax-free
earnings that
were
distributed, not
to the recovery
of contributions
to the program.
See
Figuring the
Taxable Portion
of a
Distribution
in chapter 7
(Coverdell ESA)
and in chapter 8
(QTP) of
Publication 970.
Deduct
qualified
education
expenses that
have been paid
with tax-free
interest on U.S.
savings bonds
(Form 8815). See
Figuring the
Tax-Free Amount
in chapter 10 of
Publication 970.
Deduct
qualified
education
expenses that
have been paid
with tax-free
scholarship,
grant, or
employer-provided
educational
assistance. See
the following
section on
Adjustments
to qualified
education
expenses.
Adjustments to
qualified education
expenses. If
you paid qualified
education expenses
with certain
tax-free funds, you
cannot claim a
deduction for those
amounts. You must
reduce the qualified
expenses by the
amount of any
tax-free educational
assistance and
refunds you
received.
Tax-free
educational
assistance.
This includes:
Tax-free
part of
scholarships
and
fellowships
(see chapter
1 of
Publication
970),
Pell
grants (see
chapter 1 of
Publication
970),
Employer-provided
educational
assistance
(see chapter
11 of
Publication
970),
Veterans'
educational
assistance
(see chapter
1 of
Publication
970), and
Any
other
nontaxable
(tax-free)
payments
(other than
gifts or
inheritances)
received as
educational
assistance.
Refunds.
Qualified
education expenses
do not include
expenses for which
you, or someone else
who paid qualified
education expenses
on behalf of a
student, receive a
refund. (For
information on
expenses paid by a
dependent student or
third party, see
Who Can Claim a
Dependent's Expenses,
later.)
If a refund of
expenses paid in
2004 is received
before you file your
tax return for 2004,
simply reduce the
amount of the
expenses paid by the
amount of the refund
received. If the
refund is received
after you file your
2004 tax return, see
When Must the
Deduction Be Repaid
(Recaptured),
in chapter 6 of
Publication 970.
You are considered
to receive a refund
of expenses when an
eligible educational
institution refunds
loan proceeds to the
lender on behalf of
the borrower. Follow
the above
instructions
according to when
you are considered
to receive the
refund.
Amounts that do not
reduce qualified
education expenses.
Do not reduce
qualified education
expenses by amounts
paid with funds the
student receives as:
Payment
for
services,
such as
wages,
A loan,
A gift,
An
inheritance,
or
A
withdrawal
from the
student's
personal
savings.
Do not reduce the
qualified education
expenses by any
scholarship or
fellowship reported
as income on the
student's tax return
in the following
situations.
The use
of the money
is
restricted
to costs of
attendance
(such as
room and
board) other
than
qualified
education
expenses.
The use
of the money
is not
restricted
and is used
to pay
education
expenses
that are not
qualified
(such as
room and
board).
Expenses
That Do Not
Qualify
Qualified education
expenses do not include
amounts paid for:
Insurance,
Medical
expenses
(including
student health
fees),
Room and
board,
Transportation,
or
Similar
personal,
living, or
family expenses.
This is true even if
the amount must be paid
to the institution as a
condition of enrollment
or attendance.
Sports, games,
hobbies, and
noncredit courses.
Qualified
education expenses
generally do not
include expenses
that relate to any
course of
instruction or other
education that
involves sports,
games or hobbies, or
any noncredit
course. However, if
the course of
instruction or other
education is part of
the student's degree
program, these
expenses can
qualify.
Comprehensive or
bundled fees.
Some eligible
educational
institutions combine
all of their fees
for an academic
period into one
amount. If you do
not receive or do
not have access to
an allocation
showing how much you
paid for qualified
education expenses
and how much you
paid for personal
expenses, such as
those listed above,
contact the
institution. The
institution is
required to make
this allocation and
provide you with the
amount you paid (or
were billed) for
qualified education
expenses on Form
1098-T, Tuition
Statement. See
How Do You
Figure the Deduction,
later, for more
information about
Form 1098-T.
Who Is an
Eligible Student
For purposes of the
tuition and fees deduction,
an eligible student is a
student who is enrolled in
one or more courses at an
eligible educational
institution. The student
must have either a high
school diploma or a General
Educational Development
(GED) credential.
Who Can
Claim a
Dependent's
Expenses
Generally, to claim the
tuition and fees deduction
for qualified education
expenses for a dependent,
you must:
Have paid the
expenses, and
Claim an
exemption for the
student as a
dependent.
Table 21-3 summarizes who
can claim the deduction.
Table 21-3.
Who Can Claim
a Dependent's
Expenses?
Do not rely
on this table
alone. See Who
Can Claim a
Dependent's
Expenses in
chapter 6 of
Publication 970.
IF your
dependent is an
eligible student
and you...
AND...
THEN...
claim
an exemption for
your dependent
you
paid all
qualified
education
expenses for
your dependent
only
you
can deduct the
qualified
education
expenses that
you paid. Your
dependent cannot
take a
deduction.
claim
an exemption for
your dependent
your
dependent
paid all
qualified
education
expenses
no one
is allowed to
take a
deduction.
do not claim an
exemption for
your dependent,
but are
eligible
to
you
paid all
qualified
education
expenses
no one
is allowed to
take a
deduction.
do not claim an
exemption for
your dependent,
but are
eligible
to
your
dependent
paid all
qualified
education
expenses
no one
is allowed to
take a
deduction.
are
not
eligible to
claim an
exemption for
your dependent
you
paid all
qualified
education
expenses
only your
dependent
can deduct the
amount you paid.
The amount you
paid is treated
as a gift to
your dependent.
are
not
eligible to
claim an
exemption for
your dependent
your
dependent
paid all
qualified
education
expenses
only your
dependent
can take a
deduction.
How Much Can
You Deduct
The maximum tuition and
fees deduction in 2004 is
$4,000, $2,000, or $0,
depending on the amount of
your modified adjusted gross
income (MAGI). For details
on figuring your MAGI, see
chapter 6 of Publication
970.
How Do You
Figure the
Deduction
Generally, you figure
the deduction using the
Tuition and Fees
Deduction Worksheet in
the Form 1040 or Form
1040A instructions.
However, if you are
filing Form 2555, Form
2555-EZ, or Form 4563,
or if you exclude income
from sources within
Puerto Rico, you must
complete the worksheet
in chapter 6 of
Publication 970.
To help you figure
your tuition and fees
deduction, you should
receive Form 1098-T,
Tuition Statement.
Generally, an eligible
educational institution
(such as a college or
university) must send
Form 1098-T (or
acceptable substitute)
to each enrolled student
by January 31, 2005.
To claim the
deduction, enter the
allowable amount on Form
1040, line 27, or Form
1040A, line 19.
