Taxpayer asks:
Dear Taxgirl,
Did you find a way to deduct all those college application fees on taxes? I know exams are not tax deductible, but wondering about all the other money used to apply. Since enrollment will not happen until August, I think I’m out of luck with funds spent in 2015.
Taxgirl says:
I’ll be the bearer of bad news. I know that there are those who say yes but I think you’re barred (under the circumstances you presented) for 2015 for two reasons:
- A high school student wouldn’t be considered an “eligible student” in 2015 for purposes of the tuition & fees deduction, American Opportunity Credit or the Lifetime Learning Credit. An “eligible student” is generally defined as a student enrolled in an “eligible institution” – typically any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S.; and
- For the tax year 2015, you can only deduct expenses paid in 2015 “in connection with enrollment at an institution of higher education during 2015 or for an academic period beginning in 2015 or in the first 3 months of 2016.” Since most high school students who pay college application fees in 2015 are doing so for enrollment in fall 2016, that would not count.
Those that say yes base their answer on the fact that college admission fees otherwise meet the criteria since they’re a requirement for enrollment and are paid directly to the educational institution (college entrance exams are not, which disqualifies them right out of the gate). However, you can’t ignore the definition of a student and most traditional high school students aren’t going to qualify under the rules as noted above.
It’s true that college admission fees are expensive and they can add up quickly. While it used to be the case that students applied to just two or three schools, nearly one-third of prospective college students now apply to seven or more colleges. With an average application fee of $41 (the most common fee is $50 with fees topping out at $90 for Stanford), students can easily spend a few hundred dollars just on college applications. Add that to the cost of college entrance exams (the cost to sit for the SAT starts at $26) and parents may find themselves shelling out a lot more than expected.
However, when it comes to deductibility, these are considered personal expenses and generally not deductible. Plus side? In four years or so, maybe your child can pay you back.
For more information about college-related credits and deductions, check out this prior post and IRS Pub 970 (downloads as a pdf).
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
