Tuition and Fees Deduction

[dtlee]

In the past we've had some rather heated discussions about whether or not there are any education benefits available for the tuition paid by a high school student who is taking an accredited college course through a local college given at their high school.

To summarize, the general discussion has centered around the fact that:

1. The Lifetime Learning Credit requires that the course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills.
2. The American Opportunity Credit (or the Hope Credit) requires that for at least one academic period in the year the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
3. The Tuition and Fees Deduction requires that a student must have either a high school diploma or a General Educational Development (GED) credential.

Most of us agree that these rules make most high school students ineligible for any of these benefits due to the above limitations. Some of us accept #2 to mean that a course taken in the spring semester of the senior high school year would be eligible if the student meets the requirement by the end of the year.

However, the IRS has thrown us a new curve similar to the SEHI Medicare B changes last year.

The instructions for Form 8917 have removed restriction #3. Last year, the description of an eligible student was:

For purposes of the tuition and fees deduction, an eligible student is a student who was enrolled in one or more courses at an eligible educational institution (as defined under Qualified education expenses, earlier). The student must have either a high school diploma or a General Educational Development (GED) credential.

This year, the description is:

For purposes of the tuition and fees deduction, an eligible student is a student who was enrolled in one or more courses at an eligible educational institution (defined earlier).

To me it seems like this change means that high school students will now be allowed to take a Tuition and Fees Deduction for such college courses.

At least one service indicates that this change was intentional and that Publication 970 will likewise be changed.

Thoughts anyone?

[appelman]

Take them at their word.

I'd go with it!

[MilTaxEA]

I'd look at the IRC to see if there was an underlying law change rather than trust the summary the IRS gives us. That is why we are paid the big bucks...

[dtlee]

Honestly, years ago I made up a chart that was based on the IRC and left this requirement out because I never found it in the code. I asked for comments from associates and they all corrected me and pointed me to Publication 970. To this day, I do not know specifically where the IRS came up with the diploma or GED requirement. Perhaps it was from a court case.

If you could point me to where it was in the code, I would be glad to research if it has changed.

[MilTaxEA]

If you could point me to where it was in the code, I would be glad to research if it has changed.

I just looked around under section 222 and 25 along with the treasury regulations for section 25 and don't see any requirement for a GED to take the Tuition and Fees deduction. I wonder where the IRS pulled that requirement from? I'd probably do some more research if it were my client, but it looks like it is a legitimate deduction as long as it is an expense paid for a non-hobby higher-education course.

It is weird that Pub 970 still has the GED/diploma requirement (yes, I know they haven't updated it since last year). Where are they getting this from? Maybe someone else on the board knows the history behind that GED/diploma requirement the IRS is referencing.

[Jiggers]

Information in the report from "The Tax Institute" confirms that there is a change in the IRS interpretation and that all open years should be amended.

[MilTaxEA]

Information in the report from "The Tax Institute" confirms that there is a change in the IRS interpretation and that all open years should be amended.

Great news! Do we have a cite for that?

[FEDUKE404]

What is IS ?

Interesting - as you mentioned this mess is not unlike the "what I meant to say was..." instructions on the SEHI issues.

Common sense would seem to indicate a high school student could not deduct expenses for related college courses.

But I guess if the precocious little Bobby in middle school wants to take a physics course at the nearby college, in lieu of an afternoon softball game, then it looks as if he can likely write it off on his taxes.

This just adds to the existing maze with any education expenses. Compare what is/is not allowable for AOC, or lifetime learning credit, or tuition/fees adjustment, or even what "can" be used for funds from a Coverdell account.

I'm beginning to think the IRS may not even know its own rules!!

FE

[MilTaxEA]

Common sense would seem to indicate a high school student could not deduct expenses for related college courses.

I would actually think the opposite. In my town it is not uncommon for HS students to take enough college courses during the regular school day so that they graduate HS with a standand HS diploma along with an Associates degree. I see no reason why they shouldn't take credit for those courses for out-of-pocket expenses.

[KC-CPA]

I have a client who has a daughter (a junior) in high school who took 6 credit hours in the fall, education cost $500. From this thread and what I have found I believe she can take the AOC for those dollars. Do the rest of you confirm?

As far as part time student, what is exactly the definition of that (6 credit hours, 3, or just simply enrolled?)

[Lion]

You might not want to use up a year of AOC that you can take for only four years. Save it for a more expensive year.

Part time is anything less than what that college calls full time.

[Gary2]

I have a client who has a daughter (a junior) in high school who took 6 credit hours in the fall, education cost $500. From this thread and what I have found I believe she can take the AOC for those dollars. Do the rest of you confirm?

As far as part time student, what is exactly the definition of that (6 credit hours, 3, or just simply enrolled?)

The tuition and fees deduction was reinterpreted to not require a high school or similar degree.

However, as far as I know, the AOC was not reinterpreted to allow enrollment in a high school degree program to satisfy the enrollment requirement. Merely taking college level courses constitutes enrollment in the course, but not in the degree program. See Pub. 970, page 14, example 3.