Massachusetts Education-Related Tax Deductions

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. To figure the total tax credit or tax deduction amount for an eligible student, you may be able https://turbo-tax.org/ to include qualified expenses, such as tuition, fees, books, supplies, and other required course materials, but not room and board. These credits are subject to income limitations, so your amount may be reduced or eliminated based on your adjusted gross income, or AGI.

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. If you have had $600 or more of your student loans forgiven, https://turbo-tax.org/and-fees-deduction/ the forgiven amount could be considered taxable income. However, discharged loan amounts resulting from certain student loan forgiveness and repayment assistance programs are tax-free. Taking advantage of these education tax credits and other education tax breaks may help you keep more of your money. There are tax breaks for people saving for college, current students, and graduates who are paying off student loans.

Tuition and Fees Deduction

The Tuition and Fees Deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deduction on Schedule A (Form 1040).

You can deduct any qualified expenses up to $4,000, even if you paid the tuition and fees with a loan. If you take the Tuition and Fees Deduction and you have also paid interest on student loans, you may be able to take the Student Loan Interest Deduction as well. You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent.

The Tax Credit Calculation

If you are an eligible student at an accredited college or university, you may qualify for this credit. To qualify, you can’t get more than $60,000 in modified adjusted income if you file as single, head of household, or widowed. If you are married filing jointly, your modified adjusted gross income must not exceed $130,000.

• For joint filers, the amount is reduced with a modified AGI between $145,000 and $175,000.
• Parents can deduct the tuition fees they pay for their children’s education, allowing them to save taxes even if they have no other tax-saving options.
• However, you can’t deduct personal, living, or family expenses, such as room and board.
• A taxpayer may deduct expenses paid
  for their own qualifying higher education expenses, or for the expenses of a
  dependent.
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• In most cases, a taxpayer who qualifies for the tuition and fees deduction will have received a Form 1098-T from the qualified educational institution.

However, depending on your circumstances, you may be able to deduct all or part of your tuition expenses when you file your tax return. The tuition and fees deduction was in effect through the 2020 tax year but has since expired. However, there are other education-related deductions you may be eligible for. Here’s what you need to know about this deduction and your eligibility. You may not need to pay income tax on amounts forgiven through the public service loan forgiveness or other assistance programs that are listed below.

How much can I deduct?

The latest articles and tips to help parents stay on track with saving and paying for college, delivered to your inbox every week. Some college expenses, such as computers and room and board, are considered qualified 529 plan expenses for the AOTC but cannot be used to justify the Tuition and Fees Deduction. Find out about your state taxes—property taxes, tax rates and brackets, common forms, and much more.

Expenses for noncredit courses do not qualify nor do expenses for classes of sports, games, or hobbies unless they are part of the student’s degree program. Some institutions bundle fees, in which case, the institution is required to send a Form 1098-T, Tuition Statement to the student, showing the allocation of qualified educational expenses and nonqualified expenses. This means that you can’t get a refund if the credit lowers your tax liability to an amount below zero.

Refinance your student loans

Therefore, the taxpayers can only deduct the $800 of undergraduate student loan interest using the Massachusetts student loan interest deduction. College graduates can also deduct the interest that they pay on student loans. The interest deduction does not require you to itemize your taxes. To deduct student loan interest, you must have taken out the loan solely to pay qualified education expenses for you, your spouse, or a person who was your dependent at the time you took out the loan. 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.

There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. These adjustments to income were particularly advantageous because, you did not have to itemize to claim them.

Money For School Topics

For you (the parent) to claim the tuition you have to be eligible to claim your son as a dependent and have paid the expenses. If your son paid the expenses or you don’t claim him, you can’t take the tuition and fees deduction or another credit. Your son can use all eligible expenses for the Tuition and Fees Deduction or a credit if he’s not an eligible dependent. This is true regardless of whether the student, the parent, or someone else paid the fees.

One useful tax break for college graduates and their parents is the student loan interest deduction. For your 2023, this deduction is worth the amount you paid in interest for your student loans, up to $2,500, which is the maximum deduction. Qualified expenses for the Student Loan Interest Deduction are the total costs of attending an eligible educational institution (including graduate school). An eligible educational institution is a school offering higher education beyond high school. It is any college, university, trade school, or other post-secondary educational institution eligible to participate in a student aid program run by the U.S. This includes most accredited public, nonprofit, and privately-owned–for-profit postsecondary institutions.