THE TUITION AND FEES DEDUCTION FOR HIGHER EDUCATION EXPENSES

This "above-the-line" tax deduction was available to tax filers whose AGI is too high to claim either the Hope or Lifetime Learning Tax Credits. The deduction was for qualified higher education expenses paid by the taxpayer during a taxable year. Filers need not itemize, nor file a long Form 1040, to claim this deduction.

Value: The maximum deduction per year in 2002 and 2003 is $3,000 paid for qualified educational expenses, less any non-taxable gift aid (e.g., grants and scholarships), for all eligible students in the family; the deduction maximum increased to $4,000 in 2004 through 2006.

Income Limits: During Tax Years 2002 through 2006, for single tax filers, a Modified Adjusted Gross Income (AGI) of up to $65,000 and for joint tax filers, an AGI of up to $130,000. During Tax Years 2004 through 2006, single filers with an AGI of up to $80,000 and joint filers with an AGI of up to $160,000 are permitted a maximum deduction of $2,000.

Eligible Education: The same requirements as for the Lifetime Learning Tax Credit apply. However, the deduction cannot be claimed for the same student in the same year as a Hope or Lifetime Learning Tax Credit. Qualified higher education expenses are defined in the same manner as for purposes of the Hope tax credit.