Education and Work-Related Expenses

 What educational expenses are deductible?

You may be able to deduct work-related educational expenses as an itemized deduction on Schedule A of Form 1040, line 20. To be deductible, your expenses must be for education that:

  • Maintains or improves skills required in your present job; or 

Serves a business purpose and is required by your employer, or by law or regulations, to keep your present salary, status, or job.

What are types of educational expenses? 

Deductible educational expenses include amounts spent for tuition, books, supplies, laboratory fees, and similar items. They also include the cost of correspondence courses, as well as formal training and research you do as part of an educational program. Transportation and travel expenses to attend qualified educational activities may also be deductible. For more information, refer to Publication 508 (PDF), Tax Benefits for Work-Related Education; and Tax Topic 513, Educational Expenses.

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

In some cases, you may be able to deduct the cost of classes you need for work. This deduction, however, would be subject to the 2 percent of AGI floor, along with most other miscellaneous deductions you list on Form 1040, Schedule A (PDF), Itemized Deductions.

To be deductible, your expenses must be for education that:

  1. Maintains or improves skills required in your present job, or
  2. Serves a business purpose and is required by your employer, or by law to keep your present salary, status, or job. 

However, these same expenses are not deductible if: 

  1. The education is required to meet the minimum educational requirements of your job, or
  2. The education is part of a program that will lead to qualifying you in a new trade or business.

Educational expenses, related to your present work, that are incurred during periods of temporary absence from your job may also be deductible provided you return to the same job or same type of work. Generally, absence from work for one year or less is considered temporary. 

Can I take a deduction for the interest I paid on my student loan?

Starting in 1998, taxpayers who have taken out qualified loans to pay certain costs of attending an eligible educational institution for themselves, their spouse, or their dependent are allowed to take a deduction from gross income for the interest they paid on these student loans. Prior to 2002, deduction of student loan interest was limited to the first 60 months of required interest payments, and, was subject to income limitations. Beginning in 2002, interest paid over any period of time on a qualified education loan is deductible. There are also income limits. For more information, refer to Publication 970 (PDF), Tax Benefits for Higher Education; and Tax Topic 456, Student Loan Interest Deduction.

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

The maximum deductible interest on a qualified student loan is $2,500 per return. If you are a taxpayer whose return status is married filing jointly, you are allowed to deduct the full $2,500 only when your Modified Adjusted Gross Income (MAGI) is $120,000 or less. If your MAGI is between $120,000 and $150,000, the amount of your student loan interest deduction is gradually reduced. The instructions for Form 1040 (PDF) show you how to compute the deduction. If your MAGI is $150,000 or more, you are not able to take any deduction.

For those whose filing status is single, head of household, or qualifying widow(er), the full $2,500 deduction is allowed for MAGI levels equal to or below $60,000. For MAGI between $60,000 and $75,000, the deduction amount is phase out, and computation instructions are provided in the Instructions for Form 1040. If your MAGI amount is, $75,000 or more, there is no deduction.

There is no deduction if you file as married filing separately, if you are claimed as a dependent, or if the loan is from a related party or a qualified employer plan. For more information, refer to Publication 970 (PDF), Tax Benefits for Higher Education; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expenses. 

I moved to a different state to accept a new job. Will I be able to deduct all of my moving expenses? 

When moving expenses coincide closely with a job transfer or the start of a new job, some of those expenses may qualify for deduction as an adjustment to income on Form 1040 (PDF), U.S. Individual Income Tax Return. You must have moved far enough, and, generally, closer to your new job than you were before you moved. You must have started and kept full-time work for a specific period after the move. Not all moving expenses are deductible. Deductible expenses are generally limited to one-way transportation, including lodging, of your household members along the most direct route to your new residence, and transportation, parking and storage of household goods. You cannot deduct a reimbursed expense, unless the reimbursement has been counted in your wages. For more information, refer to Publication 521 (PDF), Moving Expenses,; Tax Topic 455, Moving Expenses; and the Instructions for Form 3903 PDF), Moving Expenses.