2003 Tax Help Archives  
  Home > Tax Help Archives > 2003 > Publications > Publication 508
Publication 508 2003 Tax Year

Publication 508
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Important Changes for 2002

Standard mileage rate. Generally, if you drive your car to and from school, you can deduct 36½ cents per mile. See Transportation Expenses under What Educational Expenses Are Deductible.

Limit on itemized deductions. If your adjusted gross income for 2002 is more than $137,300 ($68,650 if you are married filing separately), your itemized deductions may be limited. See the instructions for line 28 of Schedule A (Form 1040).

Employer-provided educational assistance program extended. The tax-free status of up to $5,250 of employer-provided educational assistance benefits each year has been extended through 2010. Beginning in 2002, it applies to both undergraduate- and graduate-level courses.

Important Reminder

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child.

Introduction

This publication discusses work-related educational expenses that you may be able to deduct as business expenses. It also discusses the exclusion from income of employer-provided educational assistance benefits.

To be able to deduct work-related educational expenses as business expenses, you must:

  1. Be working,
  2. Itemize your deductions on Schedule A (Form 1040) if you are an employee,
  3. File Schedule C (Form 1040) or Schedule F (Form 1040) if you are self-employed, and
  4. Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education.

Your work-related educational expenses may also qualify you for other tax benefits, such as the tuition and fees deduction and the Hope and lifetime learning credits. You may qualify for these other benefits even if you do not meet the requirements listed above.

Also, keep in mind that your work-related educational expenses may qualify you to claim more than one tax benefit. Generally, you may claim any number of benefits as long as you use different expenses to figure each one.

Tuition and fees deduction.

Because this deduction is an adjustment to income, you can claim it even if you do not itemize deductions on Schedule A (Form 1040). You can deduct the tuition and fees you pay that are required for higher education courses, possibly decreasing your 2002 taxable income by up to $3,000. However, you cannot qualify for this deduction if your income is more than $65,000 ($130,000 for joint returns). See chapter 4 of Publication 970, Tax Benefits for Education, for more information.

Hope and lifetime learning credits.

These education credits may be available for tuition and related expenses you pay for higher education. Generally, credits are more beneficial than deductions because they reduce your tax rather than your taxable income. The Hope credit could reduce your tax by up to $1,500 in 2002, and the lifetime learning credit by $1,000. You will not qualify for either of these credits if your income is more than $51,000 ($102,000 for joint returns). For more information, see chapters 1 and 2 of Publication 970.

Other tax benefits for education.

In addition to the tax benefits that are available for your work-related educational expenses, there are benefits for educational expenses that are not work related, such as your child's college tuition and fees and the interest on your qualified student loan. For information about these and other tax benefits for education, see Publication 970.

Tip

When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. First, figure your taxes using the expenses as business deductions. Then, figure your taxes again using only the expenses that qualify for a Hope or lifetime learning credit. Or you may find that a combination of credit(s) and deduction(s) gives you the lowest tax.

Comments and suggestions.

We welcome your comments about this publication and your suggestions for future editions.

You can e-mail us while visiting our web site at www.irs.gov.

You can write to us at the following address:


Internal Revenue Service
Tax Forms and Publications
W:CAR:MP:FP
1111 Constitution Ave. NW
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

Useful Items - You may want to see:

Publication

  • 463 Travel, Entertainment, Gift,
    and Car Expenses
  • 520 Scholarships and Fellowships
  • 535 Business Expenses
  • 970 Tax Benefits for Education

Form (and Instructions)

  • 2106 Employee Business Expenses
  • 2106–EZ Unreimbursed Employee Business Expenses
  • Schedule A (Form 1040) Itemized Deductions

See How To Get Tax Help, near the end of this publication, for information about getting these publications and forms.

Publications Index | 2003 Tax Help Archives | Tax Help Archives | Home