Tuition & Fees Deduction?

[hillsboro15269]

I am seeing a lot of conflicting news about whether the Tuition & Fees Deduction is allowed.

Several sites seem to indicate that it's back for 2019, and it's even retroactively allowed for 2018, so we can go back and amend 2018 returns if the T&F would have helped.

But the IRS site says pretty clearly, and I quote: "The tuition and fees deduction is not available for tax years after 2017."
(Copied from https://www.irs.gov/newsroom/tax-benefits-for-education-information-center)

Can someone provide something on the IRS site that shows that this is wrong? Why is there conflicting news on this?

Also, does anyone have any word on what Oregon is going to do about this? (In 2017 and before, since Oregon had no education credits, they allowed a subtraction equivalent to the T&F deduction a taxpayer would have taken if they didn't get the AOC or LLC, which was awesome, but when the T&F went away, that meant there was no Oregon education benefit. Will Oregon be allowing a retroactive T&F benefit?)

[abctax55 · Accepted solution]

Per Form 8917, update Jan 202, directly from the IRS website:

https://www.irs.gov/pub/irs-prior/f8917--2020.pdf

[itonewbie]

If you want to know the legal basis, it was one of those extenders that were passed as part of the Further Consolidated Appropriations Act of 2020 under Sec. 104 of Division Q.

Oregon's IRC conformity date is Dec 31, 2018 and its tax code does not require modification for §222.  This means the deduction for AGI will flow through to OR-40 as the starting point without any need for adjustment.

[BobKamman]

It's fairly obvious that what IRS meant is that the deduction is NOW available, when they wrote NOT available.  You conveniently did not quote the sentence that followed:  

"If you already filed your return for a prior year and now want to claim the deduction for that year, you can do so by filing an amended return on Form 1040-X, Amended U.S. Individual Income Tax Return. Amended returns can't be filed electronically and can take up to 16 weeks to process."

[hillsboro15269]

If a TP takes the T&F on federal, then yes, it flows through to the AGI.

However, if a client takes either AOC or LLC on the federal, that does not flow through to the Oregon form.

For the 2017 year and previous, Oregon allowed a subtraction on the Oregon form, such that, if the TP took either AOC or LLC, they were allowed a subtraction in the amount that the T&F would have been, had they taken that instead. That allowed them a state benefit for education credits, where they would not have gotten one otherwise.

Since in 2018 there was no T&F deduction credit, clients did not get any Oregon benefit. Now, I'm wondering if they can get that credit ***retroactively*** for 2018.

[hillsboro15269]

It wasn't obvious to me. I guess now that I look at it, that makes a lot more sense. I just don't expect there to be blatant errors on the IRS website like that.

Is this the new normal we should start to accept?

[qbteachmt]

"I just don't expect there to be blatant errors on the IRS website like that.

Is this the new normal we should start to accept?"

Are you signed up for governmental e-newsletters? OMG, starting the last year or so, they have had typos and errors and corrections and follow up notices to correct one that was wrong and even if there already was an attempt at correction: Grammatically and content-wise, which seems a bit scary.

[itonewbie]

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@hillsboro15269 wrote:

It wasn't obvious to me. I guess now that I look at it, that makes a lot more sense. I just don't expect there to be blatant errors on the IRS website like that.

Is this the new normal we should start to accept?

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Pubs and IRS website should really be just your starting point.  Although they are good references in layman's terms, they do not carry any authority.  Often times, those articles are abbreviated for the general public's consumption and may not go into technical details that need to be considered.  It would always be advisable to cross check what you read against filing instructions as well as the IRC, Treas. Regs, Rev. Proc., Rev. Rul., caselaw, etc., depending on the complexity of the issue at hand.

[BobKamman]

Well, we can't all be perfect.   IRS is increasing its web content , with fewer writers and editors, because it doesn't have the resources for phone assistance and anyway that was notorious for a 30% error rate.  

I did a Google search for "congress tax tuition deduction" and came up with 1.7 million hits.  Unfortunately, some people never got the message.