- You cannot deduct college room and board fees under the tuition tax deduction because they do not count as a qualified higher education expense. The IRS only allows you to deduct tuition fees and certain expenses required to attend the institution, such as books and supplies. Room and board do count for an education tax credit, though, such as the Lifetime Learning credit or American Opportunity credit.
- The IRS lets you deduct up to $2,500 in interest payments on most student loans. Under the student loan interest deduction, you can pay for room and board with student loans and deduct the interest and origination fees, according to the IRS website. The student loans must go to pay room and board while the student attends an accredited university and room and board fees must be paid within a "reasonable" amount of time. For example, if you took out a student loan in May 2011 to pay for room and board during a summer session, you likely could deduct the interest. However, if you pay for room and board years later, this would not be considered a reasonable amount of time.
- You might be able to avoid income taxes completely if you use a 529 savings plan to pay for room and board. Under a 529 college savings plan or Coverdell plan, you can make tax-free withdrawals to pay for room and board. The cost of room and board is limited to the estimated costs published by the institution or the actual cost of on-campus housing charged by the university.
- Consult a tax professional about the finer nuances of student tax deductions. For example, you cannot deduct any college expenses if you receive reimbursement for them, such as with grants or scholarships. Also, only the person legally responsible to pay the student loans may take the deduction, and only as long as he does not have the tax status of married, filing separately.
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