Increased Tax
Breaks for Qualified Education Expenses
The Tuition and Fees Deduction Maximum Increased in 2004
Beginning in 2004, the amount of qualified education expenses that
taxpayers may take into account for computing the tuition and fees
deduction increases from $3,000 to $4,000 if their modified adjusted gross
income (MAGI) is not more than $65,000 ($130,000 if they are married
filing jointly).
Expenses that qualify for the tuition and fees deduction include
tuition and course-related fees, but not books or room and board. If
books required for a course must be purchased directly from the
educational institution, that cost can qualify for the tuition and fees
deduction.
The expenses must have been paid on behalf of the taxpayer, spouse or a
dependent.
Note that a taxpayer must subtract from the total qualified expenses
the amount of any tax-free scholarships or other educational assistance
(including tax-free withdrawals from 529 plans or Coverdell Education
Savings Accounts) received in order to compute the deductible amount.
No tuition and fees deduction will be allowed if the taxpayer's MAGI is
more than $80,000 ($160,000 if they are married filing jointly).
