Itemized Deductions/Standard Deductions > Education & Work-Related Expenses

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Frequently Asked Tax Questions

Itemized Deductions/Standard Deductions - Education & Work-Related Expenses

Rev. date: 1/2009

What types of educational expenses are deductible?

Education Expenses

Deductible educational expenses include:

Amounts spent for tuition, books, supplies, laboratory fees and similar items.
They also include the cost of correspondence courses, as well as formal training and research you do as part of an educational program.
Transportation and travel expenses to attend qualified educational activities may also be deductible.
For more information, refer to Publication 970, Tax Benefits for Education; Chapter 12.
For work related education expenses, refer to Tax Topic 513, Educational Expenses.

Rev. date: 1/2009

Can I deduct the cost of classes I need for work?

Education Expenses

In some cases, you may be able to deduct the cost of classes you need for work.

This deduction is subject to the 2 percent of AGI limitation, along with most other miscellaneous itemized deductions you list on Form 1040, Schedule A (PDF), Itemized Deductions.

Rev. date: 1/2009

Am I eligible to claim both my job education expenses (minus 2% of AGI) and the Lifetime Learning Credit on my taxes?

Education
Education Credits (Hope and Lifetime Learning Credits)
Education Expenses
Employee Business Expenses
Hope and Lifetime Learning Credits
Lifetime Learning Credit

If you are eligible to deduct educational expenses and are also eligible for the lifetime learning credit, then it is possible to claim both. You cannot use the SAME educational expenses (no “double benefit”) to claim both benefits.

You may choose to allocate some of your expenses to the deduction and others to the credit.
This can be desirable because a qualifying expense for one benefit may not be a qualifying expense for the other tax benefit. For example, the cost of course-related books ordinarily qualifies for the deduction, but not for the lifetime learning credit.

Rev. date: 1/2009

My employer is including my graduate school tuition reimbursements on my W-2 as wages. Where do I claim these education expenses on my Form 1040?

Education Expenses
Employee Business Expenses
Reimbursement
Tuition

If your graduate school tuition is deductible and the reimbursements are included in your income as wages, you may take the expense as a miscellaneous itemized deduction on Form 1040, Schedule A (PDF), Itemized Deductions.

You may also need to attach Form 2106 (PDF), Employee Business Expenses.
This deduction is subject to the 2% of-adjusted-gross-income floor that applies to certain miscellaneous itemized deductions.

Rev. date: 1/2009

What are the limits for deducting interest paid on a student loan?

Education Expenses
Interest Expense
Loan
Student Loan Interest Deduction
Student Loan Interest Statement (Info Copy Only)

The maximum deductible interest on a qualified student loan is $2,500 per return.

There is no deduction if:

You file as married filing separately,
You are claimed as a dependent, or
If the loan is from a related party or a qualified employer plan.
There are limits based on your filing status and adjusted gross income.

Rev. date: 1/2009

Last year, my parents took out a student loan for me in their name and I also took out a student loan. My parents received Form 1098-E for their loan and I also received Form 1098-E for my loan. Can we both claim the interest from the loans on our tax returns? Last year, I was not their dependent.

Education Expenses
Interest Expense
Loan
Student Loan Interest Deduction
Student Loan Interest Statement (Info Copy Only)

Since you were not your parents' dependent when they took out the student loan, the interest they paid on the loan does not qualify for deduction.

The student loan interest payments you made on the student loan you took out on your behalf are eligible for deduction, provided all the other requirements are met.
In order for a taxpayer to claim a deduction for student loan interest, the loan must be incurred for the taxpayer, the taxpayer's spouse, or a person who was the taxpayer's dependent when the taxpayer took out the loan.

Rev. date: 1/2009

How do I claim an educational expense on my return?

Education Expenses

As an employee, you may be able to deduct qualified work related education expenses as an itemized deduction.

These are treated as miscellaneous deductions on Form 1040, Schedule A (PDF), Itemized Deductions and are subject to the 2 percent of AGI floor.
You would complete Form 2106 (PDF), Employee Business Expenses, or Form 2106-EZ (PDF), Unreimbursed Employee Business Expenses, when job-related educational expenses are involved.
Alternatives to educational expense deductions should also be considered, such as the Lifetime Learning and Hope Credits, as discussed in Publication 970, Tax Benefits for Education, Chapters 2 and 3.

Self-employed individuals include educational expenses as deductions on one of the following forms:

Form 1040 Schedule C (PDF), Profit or Loss From Business.
Form 1040, Schedule C-EZ (PDF) Net Profit From Business.
Form 1040, Schedule F (PDF) Profit or Loss From Farming.


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