What Is the Form 8917 Tuition and Fees Deduction?
Explore the historical rules of the Form 8917 Tuition and Fees Deduction, a tax benefit that expired after 2020, for amending prior-year returns.
The Tuition and Fees Deduction, claimed using IRS Form 8917, allowed taxpayers to deduct higher education costs but expired after the 2020 tax year. Legislation repealed the deduction for tax years beginning in 2021, and in its place, the Lifetime Learning Credit (LLC) was expanded. This article serves as a historical reference for those who may need to amend a prior tax return for 2020 or earlier, or for individuals seeking to understand this past tax provision.
Eligibility Requirements for the Deduction
To qualify for the Tuition and Fees Deduction in a year it was available, a taxpayer had to meet criteria related to filing status, the student’s status, and income. An individual using the married filing separately status was ineligible to claim this deduction. A taxpayer also could not take the deduction if they could be claimed as a dependent on another person’s tax return. The deduction could be taken for the taxpayer, their spouse, or a dependent they claimed on their return who was an eligible student.
Income limitations based on Modified Adjusted Gross Income (MAGI) determined eligibility and the deduction amount. For the 2020 tax year, a taxpayer could deduct up to $4,000 if their MAGI was not more than $65,000 for single filers or $130,000 for those married filing jointly. The deduction was reduced to $2,000 for taxpayers with a MAGI between $65,001 and $80,000 for single filers, or $130,001 and $160,000 for joint filers. If a taxpayer’s MAGI exceeded these upper limits, they were ineligible for the deduction.
Qualified Education Expenses
The deduction was limited to tuition and fees required for enrollment or attendance at an eligible educational institution. These direct costs of instruction and mandatory fees are reported by the institution on Form 1098-T, Tuition Statement, which serves as the primary record for these expenses.
Many college-related costs were excluded. Taxpayers could not deduct expenses for room and board, insurance, student health fees (unless required for enrollment), transportation, or other personal living expenses. The cost of books and materials was also not deductible unless the fees were required to be paid directly to the institution as a condition of enrollment.
Calculating and Claiming the Deduction
To claim the deduction, taxpayers would complete Form 8917, Tuition and Fees Deduction. This required using information from their own payment records and the Form 1098-T provided by the educational institution.
On Form 8917, the taxpayer entered the student’s name and taxpayer identification number, along with the total qualified expenses paid. The form then guided a calculation based on MAGI to determine the allowable deduction amount. The final deduction was reported on Schedule 1 of Form 1040 as an “above-the-line” deduction, which reduced the taxpayer’s adjusted gross income and could be claimed without itemizing.
Coordination with Other Education Benefits
A taxpayer could not claim multiple education tax benefits for the same student in the same tax year. If a taxpayer claimed the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC) for a student, they were prohibited from also taking the Tuition and Fees Deduction for that same student. This rule prevented “double-dipping” on tax benefits for the same expenses.
Taxpayers eligible for multiple benefits had to choose the one that provided the greatest tax savings. The AOTC or LLC, being tax credits, often resulted in a more significant reduction of tax liability than the deduction. The choice depended on the taxpayer’s financial situation, income level, and the amount of qualified expenses paid.