Overseas Tuition Deduction for U.S. Income Tax

Whether you're studying medieval literature at Oxford or neurosurgery in Mumbai, overseas education probably won't be cheap. The U.S. government offers lots of ways to deduct tuition from your taxes, but you are only eligible for a deduction if you pick the right school. Just like American schools, you can't get a write-off unless the foreign school you attend qualifies for American federal student aid.

Qualified School

A foreign school must be comparable to a U.S. college or university to qualify. It must admit only students who have completed their secondary-school education or acquired a GED or its equivalent. It must be legally recognized in its country and authorized to award the equivalent of a bachelor's or higher degree.

For most students, the school has to be at least a two-year program, and online or distance-learning courses don't qualify. For-profit colleges can only qualify if they're medical or nursing schools.

An eligible educational institution also includes certain educational institutions located outside the United States that are eligible to participate in a student aid program administered by the Department of Education -- ​IRS Tuition and Fees Deduction Form​

Tax Deduction

You can deduct up to $4,000 in college costs from your taxable income, as long as you're paying for yourself, your spouse or your dependents. You're disqualified if you're married and file separate returns, or if your modified adjusted gross income is more than $80,000 -- $160,000 on a joint return. The deduction applies to tuition costs and fees, books, and equipment if buying them is mandatory for students.

Some costs, though, such as room and board in Rome or a plane trip to Cambridge are not deductible, for example.

The deduction applies to tuition costs and fees, books, and equipment if buying them is mandatory for students.

Tax Credits

You can't take an education tax credit and tuition deduction for the same student in the same year. Typically, the American Opportunity or Lifetime Learning credits offer a better deal as the money comes right off your taxes, not your taxable income. The American Opportunity credit allows you to write off up to $2,500 per qualifying student for tuition and mandatory fees but no other costs. The Lifetime Learning credit subtracts $2,000 per tax return, however fees, books and supplies may be covered. Your student travel and living expenses still are not eligible as a write-off.

Coverdell Accounts

You can put up to $2,000 a year into a Coverdell Savings Account. Each account is reserved for one student's expenses, but you can have multiple accounts for multiple kids. There is no tax deduction for contributions, but the interest accumulates tax free. Withdrawals to pay for tuition, fees, books and supplies are tax-free. If your student is attending at least half-time, room and board withdrawals are tax-free as well.