Hi, I take language classes so I can perform better in my job. However, my company does not reimburse me. Can I deduct these on my taxes?
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For 2017, the answer is: maybe. There is an excellent consideration on this subject at the following website: Tax Benefits for Education: Information Center | Internal Revenue - IRS Feel free to click on that site for a fuller consideration of the topic. On that site you will find the following information:
Qualifying Work-Related Education
You can deduct the costs of qualifying work-related education as business expenses. 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 work-related 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 costs of qualifying work-related education as a business expense even if the education could lead to a degree.
If the type of education you took meets these standards, you may claim a deduction for the expense, but there are limitations which may lower the amount of benefit the deductions will create on your tax return, particularly if you are an employee (your income is reported on Form W-2 at the end of the year with taxes withheld). First, your education expenses and other "unreimbursed employee expenses" must be greater than 2% of your Adjusted Gross Income (AGI) before they can even start to count. (For example, if you earned 30,000 last year, you must have at least 600 in expenses before you are able to get anything for the deductions). Then, after reaching the 2% threshhold, you must get more benefit from itemizing your deductions rather than taking the standard deduction. However, this deduction is eliminated for 2018, so you may only claim the expenses you had in 2017.
However, if you are a subcontractor (pay reported on Form 1099-MISC, no taxes withheld typically), then you may take a full deduction for your expenses when you file Schedule C. And, in addition to the classes themselves, there is a significant amount of other expenses you may also claim related to your education as well. Deductions for contractor expenses have not been eliminated with the law change.
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Maybe. The answer really depends on if you are also pursuing a credentials or degree or neither. If you are not in a program to pursue an associates, bachelors degree or some other recognized credential, you may quality to take a work-related education deduction. If taking these language classes is:
required for you to keep your present salary, status, or job;
the requirement serves a bona fide business purpose of your employer; AND
the education isn't part of a program that will qualify you for a new trade or business,
then you can deduct them as a miscellaneous itemized deduction.
You will need to itemize in order to be able to deduct your education expenses.
Click here to learn more.
Miscellaneous itemized deduction are subject to the 2% rule. For Example, if you make $100,000 and you have $3,000 in work related education expenses, you can only deduct $1,000 because the first $2,000 ($100,000 x .02) is not deductible.
If you are pursuing a degree or some type of credentials, there are more advantageous tax breaks you may be able to claim. Please read the following articles to see if any of the following apply to you:
NOTE: In order to qualify for an education credit or tuition and fees deduction, you must meet the following requirements:
- at least a half-time course load for a minimum of one semester beginning in that year
- You must be enrolled in a program that leads to an associates or bachelors degree or some other recognized credential.