Knowing how to declare and deduct tuition fees at the IRS can save you a few euros every year. Know the rules and stay abreast of the amount of deductions.
Anyone who has children studying in higher education knows how much it costs to pay annual university fees. The expense, however, can be rewarded later – albeit partially – if you declare the IRS kickbacks.
The help is not much, but it can already make a difference in the final result of the accounts. You just have to know how to declare expenses and how to show the Tax Authority that a good part of your income is being invested in your children’s education.
Why report tuition fees to the IRS?
Fees are expenses with education services, so they are expenses with deduction from the specific collection. If done right, including tuition fees in the IRS increases the specific deduction and earns you more money than if you put that expense in the “pie” of general family expenses.
What fees can be declared?
Fees from any educational establishment can be included in the IRS declaration – provided that the establishment belongs to the National Education System or has similar purposes recognized by the competent ministries.
This means that can (and must) declare to the Tax Authorities the fees paid in foreign universities.
What does it take to report tuition fees to the IRS?
In order to declare the fees correctly, it is necessary that they are paid against an invoice with a tax number. The Tax Authorities only allow you to include expenses with tuition fees in the IRS if they are associated with your tax number, so this is an essential step so that you don’t have a bad surprise at the end of the year.
If the fees are not yours, but are those of a child or civil godchild, you can consider them in your IRS declaration, but you must ensure that the Tax Identification Number (NIF) of that dependent is associated with your household and appears as dependent on your IRS tax return.
Are there limits to the amount of IRS bribes?
When you submit invoices for tuition fees, the amount you must declare is what you must declare, that is, the total amount you paid is considered, with no maximum limit.
However, it should be remembered that tuition fees are included in the set of education expenses, which have a maximum deduction ceiling of 800 euros. Thus, accounting done, tuition accumulates with other education expenses and 30% deducted from collectionup to one maximum of 800 euros.
This deduction limit is valid for the household – that is, it does not increase in proportion to the number of students in the family.
What if the children are no longer dependent?
If, from a tax point of view, your children are no longer dependents, they can still declare the fees to the IRS, except that, instead of being included in the parents’ declaration, they have to associate the invoices with the declaration itself.
Other expenses that enter the IRS in addition to tuition fees
In addition to including tuition fees in the IRS, Portuguese citizens can also submit charges for renting displaced students in their annual tax return.
Lease expenses are not associated with tuition fees, but are also included as an education expense. However, there is an excellent detail for you: if the student is displaced, the leasing charge increases the maximum limit for the deduction of education and training expenses.
Let’s break it down: if, under normal conditions, you can deduct up to 800 euros from the collection with education expenses, the truth is that this value rises to 1000 euros if, in addition to tuition fees, the student pays rent from a property.
The only less positive detail is that these thousand euros cannot be distributed in any way: the deduction obtained with the lease cannot exceed 300 euros and the remaining 700 euros must be obtained with other types of education and training expenses.
In order to be able to deduct student rent expenses, the lease contract must be in the name of the student (who must be registered with the Tax Office and declare himself as a displaced student) and he must be enrolled in an institution located more than 50Km from the tax residence of the household in which he is inserted. It is also necessary that the tenancy agreement specify that it is intended to house a displaced student.
It follows, then, that the inclusion of tuition fees in the IRS is an advantageous practice, and the benefit grows even more if they are added to the rental expenses for housing the student.
Therefore, you should be careful to always ask for invoices with a tax number and ensure that they are correctly registered in the E-Fatura for later inclusion in the IRS declaration.
Article originally published in April 2019. Last updated in January 2023.