Tuition deductible as continuing education? Special medical/dental professional situation

[Dzeet]

I am an Oral & Maxillofacial Surgery resident. I am a DMD, in a post graduate residency program. We are paid a salary by a consortium funded by the government, but our clinic and place of work is fee based as I charge CPT codes for billing everyday. As part of my program, I attend medical school and pay their tuition to earn an MD. The medical degree does not increase my scope of practice and it fulfills the "maintains or improves skills needed in your present work" line of topic 513. During school, I am continuing to get paid from the consortium.

My question is, can I deduct the tuition I pay in medical school as continuing education? 

[ColeenD3]

Employee business expenses were repealed in 2017 under TCJA. There are no more deductions for W-2 employees. If you were self-employed, CEUs would be deductible.

You may qualify for the Lifetime Learning Credit.

Who can claim the LLC?

To claim the LLC, you must meet all three of the following:

1. You, your dependent or a third party pay qualified education expenses for higher education.
2. You, your dependent or a third party pay the education expenses for an eligible student enrolled at an eligible educational institution.
3. The eligible student is yourself, your spouse or a dependent you listed on your tax return.

Who is an eligible student for LLC?

To be eligible for LLC, the student must:

• Be enrolled or taking courses at an eligible educational institution.
• Be taking higher education course or courses to get a degree or other recognized education credential or to get or improve job skills.
• Be enrolled for at least one academic period* beginning in the tax year.

What are the income limits for LLC?

• For TY2020, the amount of your LLC is gradually reduced (phased out) if your MAGI is between $59,000 and $69,000 ($118,000 and $138,000 if you file a joint return).
• You can’t claim the credit if your MAGI is $69,000 or more ($138,000 or more if you file a joint return).

Claiming the credit

To be eligible to claim the AOTC or LLC, the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement PDF, from an eligible educational institution, whether domestic or foreign. Generally, students receive a Form 1098-T, Tuition Statement, from their school by January 31. This statement helps you figure your credit. The form will have an amount in box 1 to show the amounts received during the year. But this amount may not be the amount you can claim. See qualified education expenses for more information on what amount to claim.

What is the LLC worth?

The amount of the credit is 20 percent of the first $10,000 of qualified education expenses or a maximum of $2,000 per return. The LLC is not refundable. So, you can use the credit to pay any tax you owe but you won’t receive any of the credit back as a refund.

[Dzeet]

Thank you Coleen.

Just want to clarify. Based on tax topic 513 from the IRS, it seems as if I could qualify for deduction for work-related educational expenses as fee based worker. However, it sounds like under TCJA, this topic is outdated? 

[AnnetteB6]

The topic is current, but only for the situations shown:  

• Self-employed individual
• Qualified performing artist
• Fee-based state or local government official
• Disabled individual with impairment-related education expenses

The fee-based worker must be a state or local government official to qualify to claim employee business expenses.  

Under the Tax Cuts and Jobs Act, all others receiving a W-2 are not eligible to claim employee business expenses of any kind for tax years 2018 through 2025.  

As Tax Expert Coleen suggested, you may be eligible for the Lifetime Learning Credit based on your education expenses.  

Use the following steps to go to the Education Expense section of your return to see if you qualify:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner) 
• This opens a box where you can type in “education” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to education”
• Click on the blue “Jump to education” link

@Dzeet