Educational Expenses

You may be able to deduct work–related educational expenses paid during the year as an itemized deduction on Form 1040, Schedule A. To be deductible, your expenses must be for education that (1) maintains or improves your job performance, or (2) is required by your employer or by law to keep your salary, status or job. Also, the education cannot part of a program that will qualify you for a new trade or business.

Although the education must relate to your present work, educational expenses incurred during temporary absence from your job may be deductible. However, after your temporary absence, you must return to the same kind of work. Usually, absence from work for one year or less is considered temporary.

If you are an employee, you generally must complete Form 2106 or Form 2106-EZ. Educational expenses are deducted as miscellaneous itemized deductions on Form 1040 Schedule A; they are subject to the 2% of adjusted gross income limit. For more information on the 2% limit, refer to Publication 529 and/or Form 1040, Schedule A Instructions.

Self–employed individuals include educational expenses on Form 1040 (Schedule C), Form 1040 (Schedule C-EZ) or Form 1040 (Schedule F).

Your employer may report the educational assistance payments on your Form W-2 in the appropriate box under "other". Taxable reimbursements will be reported by your employer as income to you in the appropriate box of Form W–2.

For more information on educational expenses or Education Tax Credits, refer to Chapters 11 & 12 of Publication 970, Tax Benefits for Education.