Frequently Asked Tax Questions
Itemized Deductions/Standard Deductions - Education & Work-Related
Expenses
Rev. date: 1/1/2011Deductible educational expenses include:
Rev. date: 1/1/2011In some cases, you may be able to deduct the cost of classes
you need for work.
Rev. date: 1/1/2011If you are eligible to deduct educational expenses and are also
eligible for one of the education credits (the Hope Scholarship Credit,
the Lifetime Learning Credit, or the American Opportunity Tax Credit), then
it is possible to claim both. You cannot use the SAME educational expenses (no
“double benefit”) to claim both benefits.
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You may choose to allocate some of your expenses to the deduction
and others to the credit.
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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 Hope Scholarship Credit or the Lifetime Learning Credit. For tax years
beginning in 2009 and 2010, course related books may qualify for the American
opportunity Tax Credit.
Rev. date: 1/1/2011If 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.
Rev. date: 1/1/2011As an employee, you may be able to deduct qualified work-related
education expenses as an itemized deduction.
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These are treated as miscellaneous deductions on
Form 1040 Schedule A (PDF),
Itemized Deductions and are subject to the 2 percent of AGI floor.
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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.
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Alternatives to educational expense deductions should
also be considered, such as the Lifetime Learning Credit, and the Hope
Scholarship Credit, 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:
The tuition and fees deduction may be claimed on Form 1040.
The education credits may be claimed for Form 8863.
Rev. date: 1/1/2011The maximum deductible interest on a qualified student loan
is $2,500 per return.
There is no deduction if:
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You file as married filing separately,
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You are claimed as a dependent, or
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If the loan is from a related party or a qualified employer
plan.
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There are limits based on your filing status and adjusted
gross income.
Rev. date: 1/1/2011Since you were not your parents' dependent when they took out
the student loan, the interest they paid on the loan does not qualify for the
student loan interest deduction.
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The student loan interest payments you made on the student
loan you took out on your behalf are eligible for the student loan interest
deduction, provided all the other requirements are met.
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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.
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