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 limitation, along with most other miscellaneous itemized 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.

For more information, refer to Publication 970, Tax Benefits for Education; and Tax Topic 513, Educational Expenses

References:

Publication 970, Tax Benefits for Education

Tax Topic 513, Educational Expenses

Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits)

Am I eligible to claim both my job education expenses (minus 2% of AGI) and the Lifetime Learning Credit on my taxes?

If you are eligible to deduct educational expenses and are also eligible for the lifetime learning credit, then it is possible to claim both, as long as you do NOT use the SAME educational expenses to claim both benefits. Your expenses must be divided between the two. This is sometimes desirable because a qualifying expense for one benefit may not be a qualifying expense for the other tax benefit. For more information, refer to Publication 970, Tax Benefits for Education; Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits); and Tax Topic 513, Educational Expenses.

My employer is including my graduate school tuition reimbursements on my W-2 as wages. Where do I claim these education expenses on my Form 1040?

If your graduate school tuition is deductible and the reimbursements are included in your income as wages, you may take the expense as a miscellaneous itemized deduction on Form 1040, Schedule A (PDF), Itemized Deductions, line 20. You may also need to attach Form 2106 (PDF), Employee Business Expenses. For more information, refer to Publication 970Tax Benefits for Education; Tax Topic 513, Educational Expenses; and Form 2106 (PDF), Employee Business Expenses.

For business travel, are there limits on the amounts deductible for meals?

Meal expenses are deductible only if your trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. The amount of the meal expenses must be substantiated, but instead of keeping records of the actual cost of your meal expenses you can generally use a standard meal allowance ranging from $30 to $51 in 2004 depending on where and when you travel.

Generally, the deduction for unreimbursed business meals is limited to 50% of the cost that would otherwise be deductible.

For more information on business travel expenses and restrictions, refer to Tax Topic 511, or Publication 463, Travel, Entertainment, Gift, and Car Expenses, and Publication 1542, Per Diem Rates .