If you pay education expenses and qualified tuition for either yourself, a spouse, or another dependent, you may qualify for a deduction of your costs. You may be able to claim different deductions by using your tuition and fees instead of taking them as a direct deduction. Consider the following:
- The American Opportunity tax credit (AOTC) or the Lifetime Learning Credit (LLC)
- Deducting as a business expense if eligible, which is typically itemize.
In order to claim the tuition and fees deduction, you aren't required to itemize your expenses. Instead, you just claim the deduction as an income adjustment on your form 1040. However, you are not able to take the deductions if you are married, but file separately or if you are claimed as a dependent on someone else's return.
Taxpayers with a modified adjusted gross income greater than a set limit are subject to a reduction or elimination of the deduction depending on the filing status used. You're not able to claim the tuition and fees deduction or the AOTC or LLC for the same student in the same tax year. You may be able to combine your tuition and fees deduction with an eligible business expenses, though the same expenses can't be deducted more than once.
Also, you are not able to claim deductions based on expenses paid with scholarships, grants, fellowships or other savings accounts that were not subject to tax. Similarly, you can't claim expenses paid with distributions form qualified tuition plans, although you can claim the portion of expenses you paid equal to your contribution to the plan.
