How to deduct Part-Time MBA tuition expenses on California Tax Return?

[bobyan]

I have heard from tax professors that this you can still deduct MBA costs on your California state taxes using miscellaneous deductions.  Any idea how to do that in Turbotax?

[KrisD15]

The Tuition and Fees deduction was eliminated for tax years 2018 and later on the Federal return, but the California return was allowing it as an adjustment. 

THEN Congress changed its mind and the Tuition and Fees was reinstated, retroactive. (So if you can take it for tax year 2018, you might consider amending 2018)

You can enter the expenses in the "Education" section under Deductions & Credits on the Federal return. 

[bobyan]

Just so it’s absolutely clear - you are saying California residents can not deduct tuition and fees for tax year 2019?

Can you please provide a link to this in the tax code?

Thank you!

[ThomasM125]

California residents can deduct tuition and fees in 2019. Since it is allowed on the federal return and no adjustment for it is mentioned in the instructions for California form 540, it is also allowed on the California return.

Here are the instructions to form 540:

https://www.ftb.ca.gov/forms/2019/2019-540-booklet.html

[mlilinshtein]

How would i file this in my state taxes for turbo tax software. I made my $60k tuition as an Other Adjustments to Income - Subtraction. Is that the correct way to do it?

[MarilynG1]

@mlilinshtein Enter your Education Expenses in the Education Section of your Federal return.  You may qualify for a Lifetime Learning Credit or Tuition and Fees Deduction.

You don't have to be a full-time student or have a 1098-T to claim these expenses. 

This will carry over to your California return, so you will not need to make adjustments there.

Click this link for more info on Education Credits. 

[applejamesk]

Is there a code we can reference for the tuition deduction? I tried searching "tuition" or "education expense" in the link you provided but didn't find anything relevant. 

[DawnC]

You can search for Education, or go to the Deductions & Credits section of the federal return.   You can also search for 1098-T to be taken to the Education section of TurboTax.

There is not a tuition deduction anymore, but there are 2 education-related tax credits available; think link below describes both.  

What Education Tax Breaks are Available

[applejamesk]

Thank you for the information. 

My understanding is they took away the tuition deduction for federal, but not California State. Furthermore, this is for 2019 since I just got notice of proposed assessment, which I am trying to protest. 

The reason provided was I can not deduct income on the Schedule CA that I didn't include in the adjustment gross income shown on my federal tax return, which is already too late to adment since 1040 X can only be filed within 3 years. 

[DawnC]

California may have extended the tuition deduction for a year, but they longer have it.   They conform to the federal rules for education tax credits, as of Tax Year 2023.    They have deductions for contributions to 529 plans, but not a separate tuition deduction.    Any education credit for California would come from the federal return.    It is too late to file an amendment for your 2019 return.   But if you had the education expense in 2023, it would be a credit on this tax return (2023).

[applejamesk]

Thank you for the additional context. Since the proposed assessment is on my 2019 return, CA should still have the tuition deduction. My only concern was when they mentioned why I didn't do the same deduction on my federal return back in 2019, but that's when federal was removing the tuition deduciton when CA still had it.