You cannot deduct the costs of nonqualifying education, even if it meets both of the tests described earlier for qualifying education. Nonqualifying education is education that:

1. Is needed to meet the minimum educational requirements of your present trade or business, or
2. Is part of a program of study that can qualify you for a new trade or business.

Education To Meet Minimum Requirements

Education needed to meet the minimum educational requirements for your present trade or business is nonqualifying education. The minimum education necessary is determined by:

1. Laws and regulations,
2. Standards of your profession, trade, or business, and
3. Your employer's requirements.

Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet minimum educational requirements again. This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements is qualifying education.

You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work.

Example 1.
You are a full-time engineering student. You work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Although your college engineering courses improve your skills in your present job, you have not met the minimum job requirements for a full-time engineer. The education is nonqualifying education.

Example 2.
You are an accountant and you have met the minimum educational requirements of your employer. Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. These additional courses are not minimum requirements because you have already satisfied the initial minimum requirements. The education is qualifying education.

However, education that a new accountant coming into the firm needs to satisfy the new minimum requirements would be nonqualifying education for the new accountant.

Requirements for Teachers

This discussion applies to teachers and others employed by educational organizations.

The state or school district usually sets the minimum educational requirements for teachers. The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position.

If no requirements exist, you will have met the minimum educational requirements when you become a faculty member. You generally will be considered a faculty member when one or more of the following occurs.

1. You have tenure.
2. Your years of service count toward obtaining tenure.
3. You have a vote in faculty decisions.
4. Your school makes contributions for you to a retirement plan other than social security or a similar program.

Example 1.
The law in your state requires beginning secondary school teachers to have a bachelor's degree, including ten professional education courses. In addition, to keep the job, a teacher must complete a fifth year of training within 10 years from the date of hire. If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years.

Under these facts, the bachelor's degree, whether or not it includes the ten professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state.

If you have all of the required education except the fifth year, you have met the minimum educational requirements. The fifth year of training is qualifying education unless it is part of a program of study that will qualify you for a new trade or business.

Example 2.
Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. The additional four education courses are qualifying education. Although you do not have all the required courses, you have already met the minimum educational requirements.

Example 3.
Assume the same facts as in Example 1 except that you are hired with only 3 years of college. The courses you take that lead to a bachelor's degree (including those in education) are nonqualifying education. They are needed to meet the minimum educational requirements for employment as a teacher.

Example 4.
You have a bachelor's degree and you work as a temporary instructor at a university. At the same time, you take graduate courses toward an advanced degree. The rules of the university state that you can become a faculty member only if you get a graduate degree. Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. You have not met the minimum educational requirements to qualify you as a faculty member. The graduate courses are nonqualifying education.

Certification in a new state.
Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. This is true even if you must get additional education to be certified in another state. Any additional education you need is qualifying education. You have already met the minimum requirements for teaching and teaching in another state is not a new trade or business.

Example.
You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. You move to State B and are promptly hired as a teacher. You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. These additional courses are qualifying education because the teaching position in State B involves the same general kind of work for which you were qualified in State A.

Education That Qualifies You for a New Trade or Business

Education that is part of a program of study that can qualify you for a new trade or business is nonqualifying education. This is true even if you do not plan to enter that trade or business.

If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business.

Example 1.
You are an accountant. Your employer requires you to get a law degree at your own expense. You register at a law school for the regular curriculum that leads to a law degree. Even if you do not intend to become a lawyer, the education is nonqualifying because the law degree will qualify you for a new trade or business.

Example 2.
You are a general practitioner of medicine. You take a 2-week course to review developments in several specialized fields of medicine. The course does not qualify you for a new profession. It is qualifying education because it maintains or improves skills required in your present profession.

Bar or CPA Review Course

Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are nonqualifying education. They are part of a program of study that can qualify you for a new profession.

Teaching and Related Duties

All teaching and related duties are considered the same general kind of work. A change in duties in any of the following ways is not considered a change to a new business.

1. Elementary school teacher to secondary school teacher.
2. Teacher of one subject, such as biology, to teacher of another subject, such as art.
3. Classroom teacher to guidance counselor.
4. Classroom teacher to school administrator.

Previous | Next

Publication 17 | 1999 Tax Year Archives | Tax Help Archives | Home