If you had work-related education costs during 2013 or expect to incur such costs during 2014, you may be entitled to a tax deduction.
If you are an employee and can itemize your deductions, your deduction will be the amount by which your qualifying work-related education expenses – plus other job and certain miscellaneous expenses – are greater than 2 percent of your adjusted gross income.
If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income, reducing your income subject to both income tax and self-employment tax.
Your work-related education expenses may also qualify you for other tax benefits, such as the American Opportunity and Lifetime Learning Credits. These credits may be more valuable to you than the deduction.
To qualify for the deduction, your education must meet one of the following tests:
- The education is required by your employer or the law to keep your present salary, status or job.
- The education maintains or improves skills needed in your present work.
Even if the education meets one or both of the above tests, it is not qualifying work-related education if it:
- Is needed to meet the minimum educational requirements of your present trade or business;
- Is part of a program of study that will qualify you for a new trade or business; or
- Does not serve your employer’s bona fide business purpose.
If your education is not required by your employer or the law, it can still be qualifying work-related education if it maintains or improves skills needed in your present work. However, education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. This is true even if you do not plan to enter that trade or business.
If your education meets the requirements described above, the following education expenses can be deducted:
- Tuition, books, supplies, lab fees and similar items
- Certain transportation and travel costs
- Other education expenses, such as costs of research and typing when writing a paper as part of an educational program
If you use your car for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Whichever method you use, you can also deduct parking fees and tolls.
You can deduct expenses for travel, meals (limited to 50 percent of the cost) and lodging if you travel overnight mainly to obtain qualifying work-related education. Travel expenses for education are treated the same as travel expenses for other employee business purposes.
Certain cruises and conventions offer seminars or courses as part of their itinerary. Even if the seminars or courses are work related, your deduction for travel may be limited. This applies to:
- Travel by ocean liner, cruise ship or other forms of luxury water transportation
- Conventions outside the North American area