IRS Materials: Education
Pub 508
Qualifying Education
You can deduct educational expenses only if they are for qualifying education. This is" + "education that meets at least one of the following tests:
You can deduct the expenses for qualifying education even if the education could lead to a degree.
Education that does not qualify
Even if the education meets one of the tests under Qualifying Education, it does not qualify if it:
Education Required by Employer or by Law
Once you have met the minimum educational requirements for your job, your employer or the
law may require you to get more education. This additional education must be required for you
to keep your present salary, status, or job. It must serve a business purpose of your employer and
not be part of a program that will qualify you for a new trade or business.
When you get more education than your employer or the law requires, the additional education is
qualifying only if it maintains or improves skills required in your present work. See Education
To Maintain or Improve Skills.
Example. You are a teacher who has satisfied the minimum requirements for teaching. Your
employer requires you to take an additional college course each year to keep your teaching job.
You take a course and pay for it yourself. This is qualifying education even if you eventually
receive a master's degree and an increase in salary because of this extra education.
Education To Maintain or Improve Skills
If your education is not required by your employer or a law, it must maintain or improve skills
needed in your work. Education to maintain or improve skills includes refresher courses, courses
on current developments, and academic or vocational courses. However, courses you take that
are needed to meet the minimum educational requirements for your work or to qualify you for a
new trade or business are not qualifying education.
Example. You repair televisions, radios, and stereo sets for XYZ Store. To keep up with the
latest changes, you take special courses in radio and stereo service. These courses maintain and
improve skills required in your work.
Present work. Education that relates to work you may enter in the future is not qualifying
education. Education that prepares you for a future occupation includes any education that keeps
you up-to-date for a return to work or that qualifies you to reenter a job you had in the past.
Temporary absence. If you stop work for a year or less and then go back to the same kind of
work, your absence is ordinarily considered temporary. Education during a vacation, temporary
leave, or other temporary absence from your job is considered related to your present job.
However, after your temporary absence you must return to the same kind of work.
Example. You quit your biology research job to become a full-time biology graduate student for
one year. If you return to work in biology research after completing the courses, the education is
related to your present work. You may even choose to take a similar job with another employer.
What Educational Expenses Are Deductible?
If your education meets the requirements described earlier under Qualifying Education, you can
generally deduct your educational expenses. If you are not self-employed, you must itemize your
deductions. However, see Expenses Relating to Tax-Exempt and Excluded Income, later.
Deductible expenses. The following educational expenses can be deducted.
Nondeductible expenses. Educational expenses do not include personal or capital expenses. For
example, you cannot deduct the dollar value of vacation time or annual leave you take to attend
classes. This amount is a personal expense.
Unclaimed reimbursement. If you do not claim reimbursement that you are entitled to receive
from your employer, you cannot deduct the expenses that apply to the reimbursement. For
example, your employer agrees to pay your educational expenses if you file a voucher showing
your expenses. You do not file a voucher, and you do not get reimbursed. Because you did not
file a voucher, you cannot deduct the expenses on your tax return.
Transportation Expenses
If your education qualifies, you can deduct local transportation costs of going directly from work
to school. If you are regularly employed and go to school on a temporary basis, you can also
deduct the costs of returning from school to home. A temporary basis is irregular or short-term
attendance, generally a matter of days or weeks.
If you are regularly employed and go directly from home to school on a temporary basis, you can
deduct the round-trip costs of transportation in going from your home to school to home. This is
true regardless of the location of the school, the distance traveled, or whether you attend school
on nonwork days.
Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as
the costs of using your own car. Transportation expenses do not include amounts spent for travel,
meals, or lodging while you are away from home overnight.
Example 1. You regularly work in Camden, N.J., and go directly from work to home. You also
attend school every night for 3 weeks to take a course that improves your job skills. Since you
are attending school on a temporary basis, you can deduct your daily round-trip transportation
expenses in going between home and school. This is true regardless of the distance traveled.
Example 2. Assume the same facts as in Example 1 except that on certain nights you go directly
from work to school and then home. You can deduct your transportation expenses from your
regular work site to school and then home.
Example 3. Assume the same facts as in Example 1 except that you attend the school for six
consecutive Saturdays, nonwork days. Since you are attending school on a temporary basis, you
can deduct your round-trip transportation expenses in going between home and school.
Example 4. Assume the same facts as in Example 1 except that you attend classes twice a week
for one year. Since your attendance in school is not considered temporary, you cannot deduct
your transportation expenses in going between home and school. If you go directly from work to
school, you can deduct the one-way transportation expenses of going from work to school. If you
go from work to home to school and return home, your transportation expenses cannot be more
than if you had gone directly from work to school.
Using your car. If you use your car for transportation to school, you can deduct your actual
expenses or use the standard mileage rate to figure the amount you can deduct. The standard
mileage rate for 1997 is 31.5 cents per mile. Whichever method you use, you may also deduct
parking fees and tolls. See Publication 463 for information on deducting your actual expenses of
using a car.
Travel Expenses
You can deduct expenses for travel, meals (subject to the 50% limit), and lodging if:
Travel expenses for qualifying education are treated the same as travel expenses for other
employee business purposes. For more information, see Publication 463.
Caution. You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining.
Mainly personal travel. If your travel away from home is mainly personal, you cannot deduct
all of your expenses for travel, meals, and lodging. However, during the time you attend the
qualified educational activities, you can deduct your expenses for lodging and 50% of your
expenses for meals.
Whether a trip's purpose is mainly personal or educational depends upon the facts and
circumstances. An important factor is the comparison of time spent on personal activities with
time spent on educational activities. If you spend more time on personal activities, the trip is
considered mainly educational only if you can show a substantial nonpersonal reason for
traveling to a particular location.
Example 1. John works in Newark, N.J. He traveled to Chicago to take a deductible one-week
course at the request of his employer. While there, he took a sightseeing trip, entertained some
friends, and took a side trip to Pleasantville for a day. Since the trip was mainly for business, he
can deduct his round-trip airfare to Chicago, but he cannot deduct his transportation expenses of
going to Pleasantville. He can deduct only the meals and lodging connected with his educational
activities.
Example 2. Sue works in Boston. She went to a university in Michigan to take a qualifying
course for work. She took one course, which is one-fourth of a full course load of study. She
spent the rest of the time on personal activities. Her trip is mainly personal because three-fourths
of her time is considered personal time and her reasons for taking the course in Michigan were
all personal. She cannot deduct the cost of her round-trip train ticket to Michigan. She can deduct
one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the
university.
Example 3. Dave works in Nashville and recently traveled to California to take a deductible 2-
week seminar. While there, he spent an extra 8 weeks on personal activities. The facts, including
the extra 8-week stay, show that his main purpose was to take a vacation. He cannot deduct his
round-trip airfare or his meals and lodging for the 8 weeks. He can deduct only his expenses for
meals and lodging for the 2 weeks he attended the seminar.
Cruises and conventions. Certain cruises and conventions offer seminars or courses as part of their itinerary.
Even if these are work related, your deduction for travel may be limited. This applies to:
Meal Expenses
If your educational expenses qualify for deduction, you can deduct the cost of meals that qualify as travel expenses.
50% limit. You can deduct only 50% of your qualifying business-related meals if you were not
reimbursed by your employer. This includes meals while traveling away from home to obtain your education.
Employees must use Form 2106-EZ or 2106 to apply the 50% limit. See the instructions for Form 2106-EZ or 2106 to figure the 50% limit.
Travel as Education
You cannot deduct the cost of travel that is a form of education if it is even directly related to your duties in your work or business.
Example. You are a French language teacher. While on sabbatical leave granted for travel, you traveled through France
to improve your knowledge of the French language. You chose your itinerary and most of your activities to improve
your French language skills. You cannot deduct your travel expenses as educational expenses. This is true even if you
spent most of your time learning French by visiting French schools and families, attending movies or plays, and
engaging in similar activities.
Expenses Relating to Tax-Exempt and Excluded Income
Some educational assistance you receive may be tax-exempt or excluded income. This is income you receive that you
are not required to report on your tax return.
Scholarships
If you receive a tax-exempt scholarship, you must subtract the amount of the scholarship from your qualified educational expenses.
Example. Your tuition for qualifying education is $8,000. You receive a tax-exempt scholarship of $6,000 to help pay
the tuition. You can include only $2,000 ($8,000 - $6,000) as qualified educational expenses.
Part of scholarship is tax exempt. If only part of your scholarship is tax exempt, you subtract only the tax-exempt part
from your qualified educational expenses.
Example. Your tuition for qualifying education is $8,000. You receive a $6,000 scholarship of which $4,000 is tax
exempt and $2,000 is taxable. You can include only $4,000 ($8,000 - $4,000) as qualified educational expenses.
Part of tuition qualifies. If only part of your tuition is for qualifying education, you subtract only part of the tax-exempt
scholarship from the qualified educational expenses.
Example. Your total tuition is $8,000. The tuition for the courses that are qualifying education is $3,200. Your tax-
exempt scholarship is $6,000. To determine the part of the scholarship that must be subtracted from the qualified
educational expenses, multiply the scholarship ($6,000) by a fraction.
The top number of the fraction is the tuition for qualifying education, $3,200, and the bottom number is the total tuition,
$8,000. The result, $2,400, is the amount of the scholarship you must subtract from your qualified educational expenses.
You can include $800 ($3,200 - $2,400) as qualified educational expenses.
Veterans
Any educational assistance payment you receive from the Department of Veterans Affairs (VA) is tax exempt. This
includes payments for living expenses.
VA programs that pay educational expenses only. If you receive payments under a VA program that pays only for
educational expenses, such as tuition, books, and similar expenses, you must subtract the part of the VA payment that
applies to qualifying education from your qualified educational expenses.
Example. Your tuition is $1,000 and all classes are qualifying education. You receive a $780 educational assistance
payment from the VA that is solely for educational expenses. You can include only $220 ($1,000 - $780) as qualified
educational expenses.
VA programs that pay living expenses and educational expenses. If you receive payments under a VA program that
pays for both living expenses and educational expenses, you must subtract only the educational expense part of the VA
payment that applies to qualifying education from your qualified educational expenses.
Generally, 50% of the VA payments are for subsistence or living expenses. For married veterans, the percentage is higher.
Example. Your tuition is $1,000 and all classes are qualifying education. You receive a $780 educational assistance
payment from the VA. Under this program, $390 of the payment is for living expenses and $390 is for educational
expenses. You can include $610 ($1,000 - $390) as qualified educational expenses.
VA payments used for both qualifying and nonqualifying education. If you use a VA payment for educational
expenses to pay for both qualifying and nonqualifying education, you must subtract only part of the payment from
qualified educational expenses. To find out what part of the VA payment to subtract, multiply the VA payment by a
fraction. The numerator (top number) is the cost of the qualifying education. The denominator (bottom number) is the
total cost of your qualifying and nonqualifying education.
Example. Your tuition and fees for three courses are $1,500. Only two of the three courses are qualifying education.
The two courses cost $1,000. You receive a $780 educational assistance payment from the VA under a program that
covers tuition and fees only. The payment does not include any amount for living expenses. Since two-thirds
($1,000/$1,500) of the total expenses are for qualifying education, subtract two-thirds of the VA payment (2/3 ╫ $780 =
$520) from the $1,000 cost of the qualifying education. You can include $480 ($1,000 - $520) as qualified educational
expenses.
Education Savings Bond Program
You may be able to exclude from income all or part of the interest you received on the redemption of qualified Series
EE U.S. Savings Bonds during the year if you pay qualified higher educational expenses during the same year. This
exclusion is known as the Education Savings Bond Program. If you excluded interest under the Education Savings Bond
Program, you must subtract the excluded interest from your qualified educational expenses. See chapter 1 in Publication
550, Investment Income and Expenses, for more information on excluding the savings bond interest.