The IRS and Deductions for Education

An increasing number of individuals are going back to school to improve their technical or professional skills, qualify for advancement, bring home higher paychecks, or just improve their quality of life. We all know education costs money and tuition is expensive. But you may be able to offset some of the expense by claiming a deduction for your work-related educational expenses on your tax return. Let’s take a closer look at the rules.
 
First, in order to deduct work-related educational expenses, you must itemize deductions on your tax return, rather than take the standard deduction. In general, a taxpayer will itemize deductions when the total of qualified deductible expenses exceeds the standard deduction or if the taxpayer does not qualify for the standard deduction because of income limitations. For 2017, the standard tax deduction is $6,350 for single filers and $12,700 for married, joint filers.

Second, work-related educational expenses are considered “miscellaneous” expenses when itemizing and are therefore subject to a 2% floor. This means that you can only deduct the amount of miscellaneous expenses that exceed 2% of your gross income.

To be deductible, your expenses must be for education that maintains or improves your job performance, serves the purpose of your employer, or is required by your employer or by law to keep your salary, status, or job. The education must be linked with “carrying on a trade or business” in which you are already active, and it must be closely related to your current job skills. For instance, an accountant can write off courses that explain new tax rules, and a professional pianist can write off music lessons.

Expenses do not qualify if the education is needed to meet the minimum requirements of your present trade or business, or if it is part of a program of study that will qualify you for a new trade or business. Educational expenses that enable you to qualify for a promotion may be allowed. Generally, if an individual changes duties, it is not a career change, as long as he or she remains in the same line of work.

Work-related educational expenses that are deductible include those for tuition, books, supplies, lab fees, and similar items; certain transportation and travel; and other educational services, such as the cost of research and typing when part of an educational program. You cannot deduct personal or capital expenses, such as the dollar value of vacation time or annual leave taken to attend classes. This is a personal expense. Also, you cannot claim any expenses that qualify for reimbursement from your employer, even if you do not receive the reimbursement.

Enhancing your job skills is worthwhile, regardless of whether you get a tax break. However, your work-related educational expenses may qualify, so be sure to keep accurate records of all deductions to substantiate your expenses. For more information, consult your tax professional.

 

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