Gregory Hamel for Demand Media writes: The knowledge and skills necessary to be successful in a career can change over time as laws, technology and accepted practices evolve. Staying on the cutting edge of a job field may require ongoing education and training that you pay for out of your own pocket. Work-related education that is not reimbursed by your company is tax-deductible in some cases.
WORK-RELATED EDUCATION DEDUCTION
The way the work-related deduction works depends on whether you are an employee or self-employed. For employees, work-related education is an itemized deduction, which means you have to forgo your standard deduction to claim the write-off. The deduction is also subject to a 2 percent adjusted gross income limit along with a variety of other miscellaneous deductions. You to have subtract 2 percent of your AGI from the sum of all the deductions you have that are subject to the limit when calculating the amount you claim. On the other hand, self-employed workers can subtract work-related education directly from self-employment income, so the 2 percent AGI limit and the need to itemize deductions do not apply.
DEDUCTION REQUIREMENTS
The job training you receive has to meet certain guidelines to qualify for a tax deduction. According to the Internal Revenue Service, training is deductible only if it maintains or improves the skills you use at your current job or if it is required by your company or the law to keep your present job, status or salary. Education needed to meet the minimum requirements to do your job or that is part of a program that will qualify you for a new trade or business is not deductible as a work-related expense.
EDUCATION ASSISTANCE
Your employer can provide education assistance as a job benefit, such as cash you can use to pay for college tuition, books and fees. Fringe benefits you receive from work are normally considered a form of taxable income, but the IRS lets you exclude up to $5,250 in educational assistance from tax per year. Your company has to include educational assistance that exceeds $5,250 in your wages.
TUITION AND FEES DEDUCTION
Although training you receive to enter a completely new career field is not deductible as a work-related expense, it may qualify for a general tuition and fees deduction. You can deduct up to $4,000 a year for required tuition and fees paid to an accredited college, university, vocational school or other postsecondary educational program. Your modified adjusted gross income has to be under $80,000 as a single filer and $160,000 as a married person filing a joint return to qualify.
0 comments:
Post a Comment