Tuition Tax Deduction Case Could Help Students

By Dave Jordan, NEWS 9

OKLAHOMA CITY -- Many students struggle to pay their college tuition every semester, especially in a down economy. Now, a new court ruling could provide some relief for cash-strapped students.

A Maryland woman recently won a judgment allowing her to deduct her tuition from her taxes.

Lori Singleton-Clarke, a 47-year-old MBA student in Maryland, didn't see anything wrong with deducting $15,000 worth of tuition from her taxes last year, but the IRS apparently did. Clarke argued her case before a U.S. Tax court judge and won, paving the way for many grad students to do the same.

"I think it's really exciting if it's going to set a precedent and allow other MBA students and other grad students to be able to have that same tax deduction," said OCU graduate student Jennifer Polvado.

Polvado just started work on her master's degree at Oklahoma City University. She works for the school and pays a lower rate for tuition, but she still pays out about $2,000 a year out of pocket.

"MBA is going to cost me about $10,000," Polvado said.

IRS spokesman David Stell wouldn't speak specifically about the Singleton-Clarke case, but he did say that just because a person ends up in tax court over a filing, it's doesn't mean they broke the law.

"It's because the documentation provided to the IRS was not sufficient in the eyes of the examiner of the IRS review, and by going to court you can have another level of review of your own particular tax circumstances," Stell said.

Stell said there are at least two portions of the current tax code that allow tuition deduction. In fact, there's a form for work-related education that doesn't set a limit on how much money you can deduct but there are criteria.

"The education would have to be either to improve skills in your current occupation or needed to maintain your job," Stell said.

OCU Assistant Dean Jeri Lynn Jones gives the Singleton-Clarke ruling high marks.

"This is an excellent idea. It's an excellent opportunity. It really has a lot of potential for students in the future," Jones said. "There are some programs in higher education that are in excess of $100,000 for a degree, an advanced degree, and that's insane to think that someone just happens to have that kind of money lying around."

Singleton-Clarke argued her case without a lawyer. A recent study showed only 10 percent of plaintiffs won these cases. There are about 300 filed every year.

Like any other deduction, the IRS said it's important to make sure you keep the necessary records.