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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

College Tuition Deduction?

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Question: I find the area of tuition with regard to CC to be confusing. The paper application identifies tuition and fees as a deduction from income. In looking at drafts of tax forms like 1040, 8962 and 1095A, I don't see how this will work. The tuition deduction has been removed from 1040 and I have not seen anyplace where tuition will affect income as it relates to CC. Thinking it should be deducted as the forms continue to have that as a deduction from estimated income. Would you have any insight into how tuition will be deducted from income for purposes and can you confirm that it would be deductible?

Answer: According to IRS Tax Publication 970, you can reduce your income subject to tax by up to $4,000 per year. This would apply to Covered California subsidy eligibility as well.


This information is incorrect.

“Note: The Tuition and Fees Deduction expired Dec. 31, 2013. You may claim it on your tax year 2013 or prior years’ tax returns. Under current law, the deduction is not available for tax years after 2013.”

See: http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center

Unless that deduction is restored, it will not reduce income for 2014 for purposes of subsidy calculation.

It does not appear on the draft 1040 form for 2014 — instead, line 34 is marked “reserved”. See http://www.irs.gov/pub/irs-dft/f1040—dft.pdf

It’s possible that Congress may reinstate the deduction…. but there is no way to know at this point. For purposes of estimating income for 2015 (and possible subsidies), the wiser course would be to act on the assumption that it is gone.

“Tuition and fees” may be an adjustment to income of up to $4,000 per year thereby reducing MAGI, which is used to determine Covered CA subsidy eligibility.

“Tuition and fees” can be found on line 34 of form 1040.

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