Can I Deduct Tuition for Training for a Trade?
- You may deduct your vocational training tuition as a business expense if your education is required by your employer, or if it maintains or improves the vocational skills you use in your present job. You may not deduct tuition as a business expense if your purpose is to prepare yourself for a career change, or if your training is necessary for you to meet the minimum educational requirements for your present job. You cannot take this deduction if you use the standard deduction on your 1040 tax return--you only can use it if you itemize your deductions. Your business expenses are deducted from your taxable income.
- You may deduct tuition for attendance at a post-secondary vocational training institution from your taxable income, unless your filing status is married filing separately or if someone else claims you as a dependent on his tax return. The deduction limit is $4,000 and is phased out for taxpayers with modified adjusted gross incomes of $80,000 or more. You can claim the deduction even if you don't itemize your deductions.
- Tax credits generally save you more than tax deductions because you can deduct them directly from your overall tax liability instead of from your taxable income. If you're enrolled at least half-time in a post-secondary vocational training school, you can claim the American Opportunity Credit, which allows you to credit up to $2,500 in tuition expenses against your tax liability. Even if you'e taking only one class you may claim the Lifetime Learning Credit, which allows you to credit 20 percent of tuition paid against your tax liability, up to a maximum of $2,000.
- In addition to tuition, expenses for books and incidental school fees are included in all three tax write-offs. Depending on the length of your enrollment, you may deduct expenses for travelling from work to school.