What types of work-related educational expenses are deductible?

Education Expenses

• Amounts spent for tuition, books, supplies, laboratory fees and similar items.
• Transportation and travel expenses to attend qualified educational activities may also be deductible.
• For more information refer to Publication 970, Tax Benefits for Education.
• For work-related education expenses, refer to Tax Topic 513, Educational Expenses.
  

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

Education Expenses

• If you are an employee, 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.
• If you are self-employed, this deduction reduces your level of taxable income subject to income and self-employment tax.

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

American Opportunity and Lifetime Learning Credit   Deduction, Itemized   Form 1040 (Schedule A)   Lifetime Learning Credit

• 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. For tax years beginning in 2009 and 2010, course-related books may qualify for the American Opportunity Tax Credit.

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

American Opportunity and Lifetime Learning Credit   Tuition and Fees Deduction

• 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.
  

How do I claim an educational expense on my return?

Education Expenses

• If you are an employee,

-The deduction is treated as a miscellaneous deduction on Form 1040, Schedule A (PDF), Itemized Deductions;
-The deduction is subject to the 2 percent of AGI floor; and
-You need to complete Form 2106 (PDF), Employee Business Expenses, or Form 2106-EZ (PDF), Unreimbursed Employee Business Expenses, or Form 8917, Tuition and Fees Deduction.

• If you are a self-employed individual, in addition to completing Form 2106 (PDF), Employee Business Expenses, or Form 2106-EZ (PDF), Unreimbursed Employee Business Expenses, or Form 8917, Tuition and Fees Deduction, you claim the deduction 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.

• Alternatives to educational expense deductions, such as the Lifetime Learning Credit and the American Opportunity Tax Credit, as discussed in Publication 970, Tax Benefits for Education, Chapters 2 and 3, should also be considered. You need to complete Form 8863 to claim these credits.

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

Education Expenses   Interest You Can Deduct   Loan   Student Loan Interest Deduction   Student Loan Interest Statement (Info Copy Only)

• You file as married filing separately,
• You are claimed as an exemption on someone else’s return,
• The loan is from a related party or a qualified employer plan,
• You are not legally obligated to pay interest on a qualified student loan, or
• You did not pay interest on a qualified student loan.

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 You Can Deduct   Loan   Student Loan Interest Deduction   Student Loan Interest Statement (Info Copy Only)

• 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.
• 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.