This is part two of an ongoing series we’ve launched on the Insider blog on “Kids and Money.” As you prepare to send your child off to college, you should also be thinking about how to foster in them the skills necessary to build financial independence. In this series, we’re discussing how students can earn, spend, save, borrow, and protect their money in a way that aligns with personal and family values. Type “Kids and Money” into our Search Box to find all installments of the series.
I Received a Letter From the IRS!
Words no one ever wants to utter, but, until it comes, many of us don’t give tax breaks a second thought. We pay our bills as required, and at the end of the year hand over our statements and shopping bags full of receipts to our accountants. Or we let our home-based software figure out what’s in our best interest and never actually sift through the bag of receipts we’ve been hoarding because we “remember” what we paid.
The Tuition and Fees Deduction expired at the end of 2014, but that doesn’t necessarily mean it won’t be available in 2015. The Tuition and Fees Deduction has a judicial practice of disappearing and reappearing throughout the years. It first appeared in 2002 as part of the Economic and Tax Relief Reconciliation Act of 2001, where it was put in place through the end of 2005. Then, in 2006, the Tax Relief and Health Care Act extended the benefit for tax years 2006 and 2007, and so began the tradition. Various bills brought the deduction back for 2 years at a time, and even last tax year we saw another extension for the year with the Tax Increase Prevention Act.
As detailed in IRS Publication 970, the Tuition and Fees Deduction is an above-the-line deduction of up to either $4,000 or $2,000, depending on your income, taken directly on Form 1040 and 1040A. Filers do not have to use a Schedule A to claim the deduction.