You can deduct the costs of qualifying education. This is education
that meets at least one of the following two tests.
- The education is required by your employer or the law
to keep your present salary, status, or job. The required education
must serve a bona fide business purpose of your employer.
- The education maintains or improves skills needed
in your present work.
However, even if the education meets one or both of the above
tests, it is not qualifying education if it:
- Is needed to meet the minimum educational requirements
of your present trade or business, or
- Is part of a program of study that will qualify you for
a new trade or business.
You can deduct the expenses for qualifying education even if the
education could lead to a degree.
You can use Figure A as a quick check to see if your
education qualifies.
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 is qualifying education if all three of the
following requirements are met.
- It is required for you to keep your present salary, status,
or job,
- The requirement serves a business purpose of your employer,
and
- The education is not 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 can be qualifying education 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. If the courses will not
qualify you for a new trade or business, they are 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 the law, it
can be qualifying education only if it maintains or improves skills
needed in your present work. This could include refresher courses,
courses on current developments, and academic or vocational courses.
Example.
You repair televisions, radios, and stereo systems 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.
Maintaining skills vs. qualifying for new job.
Education to maintain or improve skills needed in your present work
is not qualifying education if it will also qualify you for a new
trade or business.
Temporary absence.
If you stop working for a year or less in order to get education to
maintain or improve skills needed in your present work and then return
to the same work, your absence is considered temporary. Education that
you get during a temporary absence is qualifying education if it
maintains or improves skills needed in your present 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 even if you do not go back to work with the same
employer.
Indefinite absence.
If you stop work for more than a year, your absence from your job
is considered indefinite. Education during an indefinite absence, even
if it maintains or improves skills needed in the work from which you
are absent, is considered to qualify you for a new trade or business.
Therefore, it is not qualifying education.
Figure A. Does Your Education Qualify?
Education To Meet
Minimum Requirements
Education you need to meet the minimum educational requirements for
your present trade or business is not qualifying education. The
minimum educational requirements are determined by:
- Laws and regulations,
- Standards of your profession, trade, or business, and
- Your employer.
Once you have met the minimum educational requirements that were in
effect when you were hired, you do not have to meet any new minimum
educational requirements. This means that if the minimum requirements
change after you were hired, any education you need to meet the new
requirements can be 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. Although you have not
received your degree or certification, 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, they are also needed to meet the
minimum job requirements for a full-time engineer. The education is
not qualifying 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 can be qualifying education
because you have already satisfied the minimum requirements that were
in effect when you were hired.
Requirements for Teachers
States or school districts usually set 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 there are no requirements, 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.
- You have tenure.
- Your years of service count toward obtaining tenure.
- You have a vote in faculty decisions.
- 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 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 can be 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 not
qualifying 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 not qualifying 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. 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 will qualify you
for a new trade or business is not qualifying 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 not qualifying 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.
Example 3.
While working in the private practice of psychiatry, you enter a
program to study and train at an accredited psychoanalytic institute.
The program will lead to qualifying you to practice psychoanalysis.
The psychoanalytic training 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 not qualifying 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.
- Elementary school teacher to secondary school
teacher.
- Teacher of one subject, such as biology, to teacher of
another subject, such as art.
- Classroom teacher to guidance counselor.
- Classroom teacher to school administrator.
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