Education deductions and credits aren’t only for college students. Some deductions are available for employees, employers, and the self-employed. Here’s a quick review.
As an employee, your work-related education expenses may qualify for credits such as the Lifetime Learning Credit. You don’t need to be pursuing a degree to qualify for the Lifetime Learning Credit, but the school needs to be an eligible educational institution. If you receive education benefits from your employer, those amounts are not eligible for the credit.
When the courses you take improve or maintain your current job skills and your employer does not reimburse the costs, you also have the option of claiming a miscellaneous itemized deduction. As a general rule, to be considered “work-related,” the education can’t qualify you for a new career, trade, or business.
As an employer, you can pay for graduate and undergraduate education expenses for your employees using a written educational assistance plan. By establishing a nondiscriminatory formal plan, you can claim a federal tax deduction for up to $5,250 of expenses annually. Your employee isn’t required to include the benefit as income. Don’t have a written plan? You can still pay for or reimburse expenses such as seminars that maintain or improve required skills, or expenses required under law for the employee to keep the same job.
When you’re self-employed, you can deduct expenses for qualifying work-related education from your self-employment income. You don’t have to itemize deductions to claim the expenses. In general, a connection between your present job and the education expenses is important in order to benefit from tax breaks.
Contact us for details and assistance in determining which expenses will qualify.