Tution & fees

[Unregistered]

Client is studying for masters

He has student loan interest - $600 & Tution and fees $1,485.

I think he can take only one deduction. But because he is studying for maste, can he qualify?

[Matt Sova]

2 issues

These are 2 separate issues and he could qualify for both depending on his AGI.

[Unregistered]

These are 2 separate issues and he could qualify for both depending on his AGI.

His AGI is 57,700 and single, no dependent.

[Brian EA]

Client is studying for masters

He has student loan interest - $600 & Tution and fees $1,485.

I think he can take only one deduction. But because he is studying for maste, can he qualify?

He can take the entire tuition and fees . The student loan interest is limited based on his income.

[Koss]

Education

Client is studying for masters

He has student loan interest - $600 & Tution and fees $1,485.

I think he can take only one deduction. But because he is studying for maste, can he qualify?

You are getting confused because the general rule is that you cannot claim the Education Credits and the Tuition and Fees Deduction for the same student or for the same tuition.

The student loan interest deduction is unrelated. Student loan interest is interest on a loan that was used to pay educational expenses, or even living expenses, in some earlier year, when the taxpayer was a student. The interest is always deductible, subject to the AGI limitatations, provided that the loan meets the proper criteria. The criteria for the loan are in the past. Either the loan qualifies or it doesn't. The loan effectively means that the taxpayer was a student in the past.

And this has nothing to do with educational expenses paid in 2005. If he paid tuition in 2005, then he can take the tuition and fees deduction, but he may be better off with the Lifetime Learning Credit. You said he was a graduate student, so he is not eligible for the Hope Credit.

The student loan interest deduction can be claimed indefinitely, and there are almost no restrictions, except for AGI limits, and the possibility that Congress may change the law. A taxpayer can deduct interest for a student loan that he took eight years ago, even if he never graduated, and even if he failed every course that the loan paid for. The fact is that the loan was a legitimate student at the time, and he was an eligible student at the time.

Put another way: you can deduct the tuition you paid in 2005 now, using the education credits or the tuition and fees deduction. If you borrowed money to pay the tuition, you can deduct the interest later, when you are paying back the loan.

This is not "double dipping." The interest is not an educational expense; it never was.

Nothing says you can' t do both in the same year. Your client is paying tuition for new coursework at the same time he is paying back loans from previous years.

Burton