There have been some new additions to the list of deductions you can take if you have paid college tuition. Starting out this year you can deduct up to $4,000.00 dollars of tuition paid. This is the maximum amount that can be claimed annually. The amount does not change based on family size or how many individuals in the family are currently enrolled in college.
Of course there are some requirements that must be met:
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If you are married, you must file jointly. You are ineligible for this deduction if you are married and file separately.
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If you are single your adjusted gross income must be below $65,000.00 to qualify for the whole amount. Your deduction will be reduced as your income exceeds this amount.
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The individual taking the deduction cannot be claimed on anyone else’s return.
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This deduction cannot be taken if you have paid your college expenses with earnings that are from a Section 529 plan or from a Coverdell Education Savings Account.
If you are not familiar with a Section 529 plan, it is a state sponsored college savings plan that is aimed at provided a tax advantage. There are two different types of 529 plans. They are a prepaid tuition plan and a college savings plan.
Prepaid Tuition Plans
Prepaid tuition plans will let you buy a future college education at the current prices. There can be plan fees involved, depending on when you start the plan and when you intend to use it.
College Savings Plan
A college savings plan will allow you to contribute money that will be tax-deferred and all withdrawals will be tax free if they are used for educational expenses. College savings plan will only allow you to contribute so much annually.
To learn more about college tuition deductions, visit TurboTax Online. TurboTax Online offers free deduction maximizers.
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