Use student loans and get tuition deduction

Judy O'ConnorDear Tax Talk,
My son is going to graduate school and received a tuition statement. The Form 1098-T has block 2 -- "Amounts billed for qualified tuition and related expenses" -- filled in. He is using student loans to pay for school expenses. Can he use Form 8917, Tuition and Fees Deduction, even though he is getting student loans?

-- Don

Dear Don,
Yes, your son can use Form 8917 even though he is getting student loans, since payments made with loans qualify as tuition payments.

Form 8917 is used to calculate the tuition and fees deduction of up to $4,000 on his tax return. Please note he cannot claim the deduction if:

  • He uses the filing status married filing separately.
  • He is claimed as a dependent on the tax return of another person.
  • His modified adjusted gross income is more than $80,000 ($160,000 if married filing jointly).

However, before he completes Form 8917, he may want to take a look at Form 8863, Education Credits, to see if he qualifies for the lifetime learning credit. The credit is worth up to $2,000 per year and may be of more value to him than the deduction from Form 8917. It may take a bit longer to complete the return, but it could be well worth the extra time of seeing which option works best for him.

Thanks for your question and good luck to him with his studies.

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