Office of the Bursar

2007 Tax Deduction for Higher Education

Beginning in 2007, you could be eligible for a tax deduction for the costs of higher education. This new tax deduction allows eligible taxpayers to claim a tax deduction against their income for qualified tuition and related expenses.

The 2007 Tax Deduction for Higher Education Expenses applies to educational expenses paid during 2007. You may be eligible to deduct up to $4,000 you paid for qualified tuition and related expenses as an adjustment to your income. You can deduct up to $4,000 of qualified tuition and related expenses if your modified adjusted gross income (MAGI) is not more than $65,000 ($130,000 if you are married filing jointly). If your MAGI is larger than $65,000 (130,000), your deduction may be limited. To qualify for the Tax Deduction for Higher Education Expenses, eligible taxpayers must meet the following requirements:

• You must reduce your qualified expenses by the amount of any tax-free educational assistance you received such as scholarships, grants, employer-provided assistance, etc.
• Qualified tuition and related expenses do not include the cost of insurance, medical expenses, room and board, transportation, or similar personal living expenses. Qualified tuition and related expenses do include the information technology and activity fee.
• You cannot deduct any amount for qualified tuition and related expenses for a year if a Hope or Lifetime Learning credit is claimed with respect to expenses of the individual for whom the tuition and related expenses were paid.
• You cannot use this deduction if your filing status is married filing separately.
• You cannot use this deduction if you are a nonresident alien.

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Penn State cannot provide individual tax advice and shall not be liable for damages of any kind in connection with this information. Accordingly, you should consult your tax advisor about your specific circumstances.

This information is available in alternative format upon request.