The world of taxation is constantly evolving, and as a tax professional, it’s crucial to stay up-to-date with the latest developments. One such change revolves around Form 8917, a document used to claim tuition and fees deductions. In this comprehensive article, we will delve into the details of Form 8917, its purpose, eligibility criteria, and the modifications that have been implemented recently. By understanding the nuances of Form 8917, you can better serve your clients—CPAs, tax professionals, and enrolled agents alike—by ensuring they are maximizing their tax benefits while remaining compliant with the latest tax regulations. Stay ahead of the curve and enhance your expertise in the dynamic field of taxation.
In February the IRS made a few changes by modifying tax provisions for last year. Now, change is good most of the time, but it’s not always easy. Sometimes it can mean stepping back and going in another direction.
A recent example is a change made in the Budget Bipartisan Act of 2018. On February 9 it extended and modified numerous tax provisions covering 2017.
In response to these modifications, the IRS is incrementally updating the needed forms. They’re also completing programming and testing of their processing systems to reflect each provision of the legislation.
What is the Eligibility Criteria for IRS Form 8917?
Form 8917 is used to claim tuition and fees deductions for qualified education expenses paid for an eligible student during the tax year. To be eligible for this deduction, the following criteria must be met:
- The taxpayer, their spouse, or their dependent must be enrolled at an eligible educational institution. This includes most accredited postsecondary institutions, such as colleges, universities, and vocational schools that are eligible to participate in the federal student aid programs.
- The expenses must be qualified education expenses, which include tuition and certain related expenses required for enrollment or attendance at the eligible educational institution. The expenses must be paid during the tax year for which the taxpayer is claiming the deduction.
- The student must be enrolled in a degree, certificate, or other recognized educational credential program at the eligible educational institution. Non-degree programs, courses for personal enrichment, or courses involving sports, games, or hobbies do not qualify.
- The deduction is subject to income limitations. For the tax year 2021, the deduction phases out for taxpayers with a modified adjusted gross income (MAGI) between $80,000 and $90,000 for single filers and between $160,000 and $180,000 for married couples filing jointly. Taxpayers with a MAGI above these limits are not eligible for the deduction.
It is important to note that the tuition and fees deduction was extended through the tax year 2020 but has not been extended beyond that point.
What Does This Mean to Taxpayers?
More work for you/good news for many taxpayers – which can mean good news for you if you’re using the IRS Solutions software in your tax business.
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The new legislation means they may now file tax returns claiming one or more of the following:
Extension and modification of exclusion from gross income of discharge of qualified principal residence indebtedness
- Form 1040, U.S. Individual Income Tax Return
- Form 982, Reduction of Tax Attributes Due to Discharge of Indebtednes
Extension of mortgage insurance premiums treated as qualified residence interest
- Schedule A, (Form 1040), Itemized Deductions
Extension of above-the-line deduction for qualified tuitions and related expenses
- Form 1040, U.S. Individual Income Tax Return
- Form 1040 A, U.S. Individual Income Tax Return
- Form 8917, Tuition and Fees Deduction
- Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands
- Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands
The IRS released and is reposting the revised impacted forms, instructions, and publications on the IRS website at this link: www.irs.gov/DownloadForms.
Scan the links above to find updated digital versions. Updated forms will not be printed. They will only be available on www.IRS.gov.
If your clients have already filed their 2017 federal tax returns and are eligible for any of the benefits included in the new law, it will be a good idea to review their returns. In some cases you may want to advise them to consider filing an amended return using Form 1040X.
Is Information About Submitting 2017 Tax Returns Available?
The IRS is currently compiling information regarding taxpayers’ submissions of 2017 tax returns reflecting the other sections of the Feb. 9 legislation. This information will be provided as the IRS completes related work and coordination with the tax industry.
As a member, IRS Solutions Software gives you the confidence to provide services you may have been uncomfortable with in the past. Another benefit of membership is the training you get on our monthly case study calls.
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