For the 2016 tax season, you can deduct up to $4,000 of tuition and fees. This deduction is counted as an adjustment to your income and can be taken on the 1040 or 1040A forms. The income limit for this adjustment is $80,000 for a person filing single, or $160,000 for married couples filing a joint return. This only covers tuition and fees with the college, and cannot be used for room and board. This is great for most current students since their income will likely be below $80,000. Because the typical school year covers two calendar years, you can deduct your tuition from one school year over two calendar years. For example, if you’re in a two year full-time MBA program, you can deduct tuition for the first fall semester in the first calendar year, the spring and fall semesters in the second calendar year, and the spring semester in the third calendar year. This means that you can typically use this deduction for three years for a two year program. For law students, this would mean four years of tuition deductions over the three year program. Our Founder Brandon Yahn provides more advice in this US News article about taking tuition deductions while you’re in school.
Student Loan Interest Deductions
After you graduate and begin loan repayment, you can deduct up to $2,500 in student loan interest payments each year. This is also claimed as an adjustment to your income. The income limit for this is also $80,000 for people filing single and $160,000 for married couples. This is great for most college graduates. However, if you have an MBA or JD from a top school, you may not be eligible for this deduction due to the income limits.
Tax Filing Options
You have until April 18th this year to file your personal taxes. If you file your own taxes, TurboTax has been a long-time choice for those who want to do it online. This past fall, Credit Karma also launched their own free tax product, which covers the standard 1040 tax form, to complement their free credit report product. You can also just file taxes yourself directly on the IRS website. Don’t forget to get your tax forms submitted on time and make sure you take advantage of these deductions if you qualify. These can be a big help on your journey out of student loan debt.