How To Deduct Education Expenses
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
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
To deduct these, itemize deductions on Schedule A. Your deductions must be more than the 2.00% of adjusted gross income (AGI) threshold for miscellaneous deductions.
Your job-related education expenses might also qualify you for other tax benefits like these:
- American Opportunity Credit
- Lifetime Learning Credit
Also, these expenses might qualify you to claim more than one tax benefit. If you use different expenses to figure each benefit, you can usually claim as many benefits as you want.
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
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.
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: A Spanish teacher who takes a trip to Spain to improve her knowledge of the Spanish language 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 these at www.irs.gov:
- Publication 970: Tax Benefits for Higher Education
- Publication 463: Travel, Entertainment, and Gift Expenses
- Publication 535: Business Expenses
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