Is My School Tuition Deductible?
In general, you are allowed a business deduction for education
expenses when you satisfy ALL of these requirements:
- The education was undertaken to IMPROVE skills or gain knowledge
for your current position,
- The education was NOT undertaken to acquire the basic skills and
knowledge required to qualify for your present job,
- The education will not qualify you for a promotion or new
position/occupation, even if you choose to remain on your current job,
AND
- The expenses incurred were reasonable for the benefit received.
Expenses connected with seminars about investments or unrelated to
your current job are not deductible.
Are costs of obtaining a degree deductible? Except in rare cases, the
cost of a degree program would not be deductible. However, the
individual courses included in the degree program, which meet the
above criteria, could be deductible. (Example: Sally works in retail
operations, and is going to school at night to get her college degree.
Some of her business-related courses may help her do her present job
without qualifying her for a promotion, and could be deductible.
However, her liberal arts courses - required for her degree - are
unrelated to her current position and would not be deductible.)
The above rules do NOT apply to amounts that are excluded from your
wages under an employer's educational reimbursement program which is
qualified under Section 127 of the Internal Revenue Code. Only
undergrad courses qualify for this exclusion.
NOTE: If your educational expenses DO NOT qualify for a deduction,
they still may qualify for one of the new educational credits which started
in 1998! See the separate FAQ on that topic.
