Job-Related Education Expenses

If you're an employee, you can deduct the cost of education that:

• Maintains or improves the skills required for your present job
• Is required by your employer

Ex: Jordan works for a store repairing televisions, radios, and stereo systems. To keep up with the latest changes in technology, he takes a couple of courses in television and stereo repair. Since these courses maintain and improve skills he uses in his job, he can deduct education expenses.

You can't deduct education expenses if the course:

• Isn't related to your job
• Qualifies you for a new trade or profession
• Is required to meet the minimum educational requirements in effect when you first got the job

Ex: Lee works as a nurse's aide, and she's currently enrolled in a college to become a registered nurse. Since the nursing courses she's taking qualify her for a new profession, she can't deduct her education expenses.

To deduct job-related education expenses, you must itemize deductions on Schedule A. Your deductions must be more than the 2% of adjusted gross income (AGI) threshold for miscellaneous deductions.

Your job-related education expenses might also qualify you for other tax benefits, like the:

• American Opportunity Credit 
• Lifetime Learning Credit.

Also, your job-related education expenses might qualify you to claim more than 1 tax benefit. You can usually claim as many benefits as you want if you use different expenses to figure each benefit.

Education Expenses and Self-Employment

If you're self-employed, you can deduct the cost of education for your trade or business on Schedule C. You must be able to prove that the course:

• Maintains or improves skills you need in your trade or business
• Is required by law or regulation for keeping your license to practice in your trade or profession

Ex: Attorneys can deduct the cost of attending certain continuing legal education (CLE) classes. This is true if the state bar association requires attorneys to take the classes to maintain their licenses to practice law.

You can't deduct education expenses you incur:

• To meet the minimum requirements of your present trade or business
• That qualify you for a new trade or business

This is true even if the education maintains or improves skills currently required in your business.

Allowable Expenses

You can deduct:

• Tuition, books, and fees
• Equipment and other expenses associated with obtaining the education. Ex: You can deduct research and typing expenses you incur while writing a paper for a class.
• Transportation expenses. You can deduct the cost of travel between your workplace and the school. If you return to work after class, you can deduct round-trip expenses. You can also deduct public transportation costs.

You can't deduct:

• Travel as a form of education. Ex: Dena's a high-school Spanish teacher. She takes a trip to Spain to improve her knowledge of the Spanish language and culture. Since the trip itself is an educational activity, she can't deduct her travel expenses.
• Dollar value of vacation time or annual leave you took to attend classes

Many deductible job-related education expenses might qualify for other education credits or deductions. These include:

• An education credit
• Employee-business expense deduction

Look at the tax savings of each method to maximize the benefit on your return.

To learn more about education expenses, see:

• IRS Publication 970: Tax Benefits for Higher Education
• IRS Publication 463: Travel, Entertainment and Gift Expenses
• IRS Publication 535: Business Expenses