Tuition and Fees Deduction Extended Through 2007

Tax Tips

If you’re planning on deducting your tuition and fees for 2006, here’s the good news!  It’s a go! On December 20, 2006 President Bush signed the Tax Relief and Health Care Act of 2006 which extends various deductions and credits that expired on December 31, 2005.

And here are the rules.  You’re allowed to claim a deduction for tuition and fees for “qualified expenses” as an adjustment to your income (above-the-line). You don’t have to itemize to get this deduction.

“Qualified expenses” refer to tuition and fee expenses paid in 2006, for you, your spouse, and/or child attending any accredited institute for post-secondary education.

Maximum deduction is the smaller of $4,000 or the amount of qualifying expenses paid in 2006.  No deduction is allowed if filing Married Filing Separate or if the taxpayer is a dependent.

Also, no deduction is allowed if the taxpayer claims an education credit for the same student.

For additional information on the deduction, check out IRS’ Publication 970, Chapter 6.

The following deductions and credits were also extended through 2007:

  • Deductions
    o Sales tax deduction
    o Educator’s (teacher’s) expenses deduction
    o Qualified leasehold improvements ("fast write-off" deductions)
    o New contributions to Archer medical savings accounts (Archer MSA)
  • Credits
    o DC first-time homebuyer credit
    o Work opportunity tax credit (WOTC)
    o Welfare-to-work tax credit (WWTC)
    o Indian employment tax credit
    o Increasing research activity credit

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