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2011 Tax Instructions

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2011 Tax Instructions

2011 tax instructions 1. 2011 tax instructions   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). 2011 tax instructions  You can set up and make contributions to an IRA if you receive taxable compensation. 2011 tax instructions Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. 2011 tax instructions For more information about IRAs, see Publication 590. 2011 tax instructions Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. 2011 tax instructions The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. 2011 tax instructions Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. 2011 tax instructions Many types of educational assistance are tax free if they meet the requirements discussed here. 2011 tax instructions Special rules apply to U. 2011 tax instructions S. 2011 tax instructions citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. 2011 tax instructions For information about these rules, see Publication 54, Tax Guide for U. 2011 tax instructions S. 2011 tax instructions Citizens and Resident Aliens Abroad. 2011 tax instructions Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. 2011 tax instructions A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. 2011 tax instructions Amount of scholarship or fellowship. 2011 tax instructions   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. 2011 tax instructions This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. 2011 tax instructions The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. 2011 tax instructions Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. 2011 tax instructions Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. 2011 tax instructions A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. 2011 tax instructions (But for exceptions, see Payment for services,later. 2011 tax instructions Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. 2011 tax instructions Candidate for a degree. 2011 tax instructions   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. 2011 tax instructions Eligible educational institution. 2011 tax instructions   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 2011 tax instructions Qualified education expenses. 2011 tax instructions   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. 2011 tax instructions These items must be required of all students in your course of instruction. 2011 tax instructions Expenses that do not qualify. 2011 tax instructions   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. 2011 tax instructions Payment for services. 2011 tax instructions   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. 2011 tax instructions This applies even if all candidates for a degree must perform the services to receive the degree. 2011 tax instructions (See exceptions next. 2011 tax instructions ) Exceptions. 2011 tax instructions   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. 2011 tax instructions Example 1. 2011 tax instructions You received a scholarship of $2,500. 2011 tax instructions The scholarship was not received under either of the exceptions mentioned above. 2011 tax instructions As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. 2011 tax instructions Of the $2,500 scholarship, $1,000 represents payment for teaching. 2011 tax instructions The provider of your scholarship gives you a Form W-2 showing $1,000 as income. 2011 tax instructions Your qualified education expenses were at least $1,500. 2011 tax instructions Assuming that all other conditions are met, $1,500 of your scholarship is tax free. 2011 tax instructions The $1,000 you received for teaching is taxable. 2011 tax instructions Example 2. 2011 tax instructions You are a candidate for a degree at a medical school. 2011 tax instructions You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. 2011 tax instructions The terms of your scholarship require you to perform future services. 2011 tax instructions A substantial penalty applies if you do not comply. 2011 tax instructions The entire amount of your grant is taxable as payment for services in the year it is received. 2011 tax instructions Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. 2011 tax instructions Worksheet 1-1. 2011 tax instructions    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. 2011 tax instructions    Worksheet 1-1. 2011 tax instructions Taxable Scholarship and Fellowship Income 1. 2011 tax instructions Enter the total amount of any scholarship or fellowship for 2013. 2011 tax instructions See Amount of scholarship or fellowship, earlier. 2011 tax instructions 1. 2011 tax instructions       If you are a degree candidate at an eligible educational institution, go to line 2. 2011 tax instructions If you are not a degree candidate at an eligible educational institution, stop here. 2011 tax instructions The entire amount is taxable. 2011 tax instructions For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. 2011 tax instructions       2. 2011 tax instructions Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. 2011 tax instructions (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. 2011 tax instructions ) 2. 2011 tax instructions     3. 2011 tax instructions Subtract line 2 from line 1 3. 2011 tax instructions     4. 2011 tax instructions Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. 2011 tax instructions     5. 2011 tax instructions Subtract line 4 from line 3 5. 2011 tax instructions     6. 2011 tax instructions Enter the amount of your qualified education expenses 6. 2011 tax instructions     7. 2011 tax instructions Enter the smaller of line 5 or line 6. 2011 tax instructions This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. 2011 tax instructions     8. 2011 tax instructions Subtract line 7 from line 5 8. 2011 tax instructions     9. 2011 tax instructions Taxable part. 2011 tax instructions Add lines 2, 4, and 8. 2011 tax instructions See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. 2011 tax instructions     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. 2011 tax instructions You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. 2011 tax instructions Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. 2011 tax instructions If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. 2011 tax instructions If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. 2011 tax instructions You must report the taxable amount whether or not you received a Form W-2. 2011 tax instructions If you receive an incorrect Form W-2, ask the payer for a corrected one. 2011 tax instructions For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. 2011 tax instructions How To Report How you report any taxable scholarship or fellowship income depends on which return you file. 2011 tax instructions Form 1040EZ. 2011 tax instructions   If you file Form 1040EZ, include the taxable amount in the total on line 1. 2011 tax instructions If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. 2011 tax instructions Form 1040A. 2011 tax instructions   If you file Form 1040A, include the taxable amount in the total on line 7. 2011 tax instructions If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. 2011 tax instructions Form 1040. 2011 tax instructions   If you file Form 1040, include the taxable amount in the total on line 7. 2011 tax instructions If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. 2011 tax instructions Schedule SE (Form 1040). 2011 tax instructions   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. 2011 tax instructions If your net earnings are $400 or more, you must pay self-employment tax. 2011 tax instructions Use Schedule SE, Self-Employment Tax, to figure this tax. 2011 tax instructions Form 1040NR. 2011 tax instructions   If you file Form 1040NR, report the taxable amount on line 12. 2011 tax instructions Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. 2011 tax instructions S. 2011 tax instructions Source Income Subject to Withholding. 2011 tax instructions See the Instructions for Form 1040NR for more information. 2011 tax instructions Form 1040NR-EZ. 2011 tax instructions   If you file Form 1040NR-EZ, report the taxable amount on line 5. 2011 tax instructions Generally, you must report the amount shown in box 2 of Form(s) 1042-S. 2011 tax instructions See the Instructions for Form 1040NR-EZ for more information. 2011 tax instructions Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. 2011 tax instructions Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. 2011 tax instructions Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. 2011 tax instructions They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. 2011 tax instructions Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. 2011 tax instructions Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. 2011 tax instructions Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. 2011 tax instructions Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. 2011 tax instructions Do not include these payments as income on your federal tax return. 2011 tax instructions If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. 2011 tax instructions This applies only to the part of your VA payments that is required to be used for education expenses. 2011 tax instructions You may want to visit the Veteran's Administration website at www. 2011 tax instructions gibill. 2011 tax instructions va. 2011 tax instructions gov for specific information about the various VA benefits for education. 2011 tax instructions Example. 2011 tax instructions You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. 2011 tax instructions Neither of these benefits is taxable and you do not report them on your tax return. 2011 tax instructions You also want to claim an American opportunity credit on your return. 2011 tax instructions You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). 2011 tax instructions To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. 2011 tax instructions You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. 2011 tax instructions Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. 2011 tax instructions This is called a “tuition reduction. 2011 tax instructions ” You do not have to include a qualified tuition reduction in your income. 2011 tax instructions A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. 2011 tax instructions You do not have to use the tuition reduction at the eligible educational institution from which you received it. 2011 tax instructions In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. 2011 tax instructions The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. 2011 tax instructions You must include in your income any tuition reduction you receive that is payment for your services. 2011 tax instructions Eligible educational institution. 2011 tax instructions   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 2011 tax instructions Officers, owners, and highly compensated employees. 2011 tax instructions   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. 2011 tax instructions This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. 2011 tax instructions The group must be defined under a reasonable classification set up by the employer. 2011 tax instructions The classification must not discriminate in favor of owners, officers, or highly compensated employees. 2011 tax instructions Payment for services. 2011 tax instructions   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. 2011 tax instructions This applies even if all candidates for a degree must perform the services to receive the degree. 2011 tax instructions (See below for exceptions. 2011 tax instructions ) Exceptions. 2011 tax instructions   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. 2011 tax instructions Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. 2011 tax instructions You are an employee of the eligible educational institution. 2011 tax instructions You were an employee of the eligible educational institution, but you retired or left on disability. 2011 tax instructions You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. 2011 tax instructions You are the dependent child or spouse of an individual described in (1) through (3), above. 2011 tax instructions Child of deceased parents. 2011 tax instructions   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. 2011 tax instructions Child of divorced parents. 2011 tax instructions   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. 2011 tax instructions Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. 2011 tax instructions It is provided by an eligible educational institution. 2011 tax instructions You are a graduate student who performs teaching or research activities for the educational institution. 2011 tax instructions You must include in income any other tuition reductions for graduate education that you receive. 2011 tax instructions How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. 2011 tax instructions Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). 2011 tax instructions Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 18-Feb-2014

The 2011 Tax Instructions

2011 tax instructions 12. 2011 tax instructions   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. 2011 tax instructions Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. 2011 tax instructions  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. 2011 tax instructions 5 cents per mile. 2011 tax instructions For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. 2011 tax instructions Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. 2011 tax instructions To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. 2011 tax instructions What is the tax benefit of taking a business deduction for work-related education. 2011 tax instructions   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. 2011 tax instructions Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. 2011 tax instructions An itemized deduction reduces the amount of your income subject to tax. 2011 tax instructions   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. 2011 tax instructions This reduces the amount of your income subject to both income tax and self-employment tax. 2011 tax instructions   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. 2011 tax instructions You may qualify for these other benefits even if you do not meet the requirements listed above. 2011 tax instructions   Also, your work-related education expenses may qualify you to claim more than one tax benefit. 2011 tax instructions Generally, you may claim any number of benefits as long as you use different expenses to figure each one. 2011 tax instructions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. 2011 tax instructions This is education that meets at least one of the following two tests. 2011 tax instructions The education is required by your employer or the law to keep your present salary, status, or job. 2011 tax instructions The required education must serve a bona fide business purpose of your employer. 2011 tax instructions The education maintains or improves skills needed in your present work. 2011 tax instructions 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. 2011 tax instructions You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. 2011 tax instructions Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. 2011 tax instructions 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. 2011 tax instructions This additional education is qualifying work-related education if all three of the following requirements are met. 2011 tax instructions It 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 is not part of a program that will qualify you for a new trade or business. 2011 tax instructions When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. 2011 tax instructions See Education To Maintain or Improve Skills , later. 2011 tax instructions Example. 2011 tax instructions You are a teacher who has satisfied the minimum requirements for teaching. 2011 tax instructions Your employer requires you to take an additional college course each year to keep your teaching job. 2011 tax instructions If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. 2011 tax instructions This image is too large to be displayed in the current screen. 2011 tax instructions Please click the link to view the image. 2011 tax instructions Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. 2011 tax instructions This could include refresher courses, courses on current developments, and academic or vocational courses. 2011 tax instructions Example. 2011 tax instructions You repair televisions, radios, and stereo systems for XYZ Store. 2011 tax instructions To keep up with the latest changes, you take special courses in radio and stereo service. 2011 tax instructions These courses maintain and improve skills required in your work. 2011 tax instructions Maintaining skills vs. 2011 tax instructions qualifying for new job. 2011 tax instructions   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. 2011 tax instructions Education during temporary absence. 2011 tax instructions   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 general type of work, your absence is considered temporary. 2011 tax instructions Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. 2011 tax instructions Example. 2011 tax instructions You quit your biology research job to become a full-time biology graduate student for 1 year. 2011 tax instructions 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. 2011 tax instructions Education during indefinite absence. 2011 tax instructions   If you stop work for more than a year, your absence from your job is considered indefinite. 2011 tax instructions 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. 2011 tax instructions Therefore, it is not qualifying work-related education. 2011 tax instructions Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. 2011 tax instructions The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. 2011 tax instructions 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. 2011 tax instructions 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. 2011 tax instructions You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. 2011 tax instructions Example 1. 2011 tax instructions You are a full-time engineering student. 2011 tax instructions 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. 2011 tax instructions 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. 2011 tax instructions The education is not qualifying work-related education. 2011 tax instructions Example 2. 2011 tax instructions You are an accountant and you have met the minimum educational requirements of your employer. 2011 tax instructions Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. 2011 tax instructions These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. 2011 tax instructions Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. 2011 tax instructions The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. 2011 tax instructions If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. 2011 tax instructions The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. 2011 tax instructions You generally will be considered a faculty member when one or more of the following occurs. 2011 tax instructions You have tenure. 2011 tax instructions Your years of service count toward obtaining tenure. 2011 tax instructions You have a vote in faculty decisions. 2011 tax instructions Your school makes contributions for you to a retirement plan other than social security or a similar program. 2011 tax instructions Example 1. 2011 tax instructions The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. 2011 tax instructions In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. 2011 tax instructions 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. 2011 tax instructions However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. 2011 tax instructions Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. 2011 tax instructions If you have all the required education except the fifth year, you have met the minimum educational requirements. 2011 tax instructions The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. 2011 tax instructions Example 2. 2011 tax instructions Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. 2011 tax instructions The additional four education courses can be qualifying work-related education. 2011 tax instructions Although you do not have all the required courses, you have already met the minimum educational requirements. 2011 tax instructions Example 3. 2011 tax instructions Assume the same facts as in Example 1 except that you are hired with only 3 years of college. 2011 tax instructions The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. 2011 tax instructions They are needed to meet the minimum educational requirements for employment as a teacher. 2011 tax instructions Example 4. 2011 tax instructions You have a bachelor's degree and you work as a temporary instructor at a university. 2011 tax instructions At the same time, you take graduate courses toward an advanced degree. 2011 tax instructions The rules of the university state that you can become a faculty member only if you get a graduate degree. 2011 tax instructions Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. 2011 tax instructions You have not met the minimum educational requirements to qualify you as a faculty member. 2011 tax instructions The graduate courses are not qualifying work-related education. 2011 tax instructions Certification in a new state. 2011 tax instructions   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. 2011 tax instructions This is true even if you must get additional education to be certified in another state. 2011 tax instructions Any additional education you need is qualifying work-related education. 2011 tax instructions You have already met the minimum requirements for teaching. 2011 tax instructions Teaching in another state is not a new trade or business. 2011 tax instructions Example. 2011 tax instructions You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. 2011 tax instructions You move to State B and are promptly hired as a teacher. 2011 tax instructions You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. 2011 tax instructions These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. 2011 tax instructions 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 work-related education. 2011 tax instructions This is true even if you do not plan to enter that trade or business. 2011 tax instructions If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. 2011 tax instructions Example 1. 2011 tax instructions You are an accountant. 2011 tax instructions Your employer requires you to get a law degree at your own expense. 2011 tax instructions You register at a law school for the regular curriculum that leads to a law degree. 2011 tax instructions 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. 2011 tax instructions Example 2. 2011 tax instructions You are a general practitioner of medicine. 2011 tax instructions You take a 2-week course to review developments in several specialized fields of medicine. 2011 tax instructions The course does not qualify you for a new profession. 2011 tax instructions It is qualifying work- related education because it maintains or improves skills required in your present profession. 2011 tax instructions Example 3. 2011 tax instructions While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. 2011 tax instructions The program will lead to qualifying you to practice psychoanalysis. 2011 tax instructions The psychoanalytic training does not qualify you for a new profession. 2011 tax instructions It is qualifying work-related education because it maintains or improves skills required in your present profession. 2011 tax instructions Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. 2011 tax instructions They are part of a program of study that can qualify you for a new profession. 2011 tax instructions Teaching and Related Duties All teaching and related duties are considered the same general kind of work. 2011 tax instructions A change in duties in any of the following ways is not considered a change to a new business. 2011 tax instructions Elementary school teacher to secondary school teacher. 2011 tax instructions Teacher of one subject, such as biology, to teacher of another subject, such as art. 2011 tax instructions Classroom teacher to guidance counselor. 2011 tax instructions Classroom teacher to school administrator. 2011 tax instructions What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. 2011 tax instructions If you are not self-employed, you can deduct business expenses only if you itemize your deductions. 2011 tax instructions You cannot deduct expenses related to tax-exempt and excluded income. 2011 tax instructions Deductible expenses. 2011 tax instructions   The following education expenses can be deducted. 2011 tax instructions Tuition, books, supplies, lab fees, and similar items. 2011 tax instructions Certain transportation and travel costs. 2011 tax instructions Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. 2011 tax instructions Nondeductible expenses. 2011 tax instructions   You cannot deduct personal or capital expenses. 2011 tax instructions For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. 2011 tax instructions This amount is a personal expense. 2011 tax instructions Unclaimed reimbursement. 2011 tax instructions   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. 2011 tax instructions Example. 2011 tax instructions Your employer agrees to pay your education expenses if you file a voucher showing your expenses. 2011 tax instructions You do not file a voucher and you do not get reimbursed. 2011 tax instructions Because you did not file a voucher, you cannot deduct the expenses on your tax return. 2011 tax instructions Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. 2011 tax instructions 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. 2011 tax instructions Temporary basis. 2011 tax instructions   You go to school on a temporary basis if either of the following situations applies to you. 2011 tax instructions Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. 2011 tax instructions Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. 2011 tax instructions Your attendance is temporary up to the date you determine it will last more than 1 year. 2011 tax instructions If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. 2011 tax instructions Attendance not on a temporary basis. 2011 tax instructions   You do not go to school on a temporary basis if either of the following situations apply to you. 2011 tax instructions Your attendance at school is realistically expected to last more than 1 year. 2011 tax instructions It does not matter how long you actually attend. 2011 tax instructions Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. 2011 tax instructions Your attendance is not temporary after the date you determine it will last more than 1 year. 2011 tax instructions Deductible Transportation Expenses 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 between your home and school. 2011 tax instructions This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. 2011 tax instructions Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. 2011 tax instructions Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. 2011 tax instructions Example 1. 2011 tax instructions You regularly work in a nearby town, and go directly from work to home. 2011 tax instructions You also attend school every work night for 3 months to take a course that improves your job skills. 2011 tax instructions Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. 2011 tax instructions This is true regardless of the distance traveled. 2011 tax instructions Example 2. 2011 tax instructions Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. 2011 tax instructions You can deduct your transportation expenses from your regular work site to school and then home. 2011 tax instructions Example 3. 2011 tax instructions Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. 2011 tax instructions Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. 2011 tax instructions Example 4. 2011 tax instructions Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. 2011 tax instructions Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. 2011 tax instructions If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. 2011 tax instructions 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. 2011 tax instructions Using your car. 2011 tax instructions    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. 2011 tax instructions The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. 2011 tax instructions 5 cents per mile. 2011 tax instructions Whichever method you use, you can also deduct parking fees and tolls. 2011 tax instructions See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. 2011 tax instructions Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. 2011 tax instructions Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. 2011 tax instructions For more information, see chapter 1 of Publication 463. 2011 tax instructions You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. 2011 tax instructions Mainly personal travel. 2011 tax instructions   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. 2011 tax instructions You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. 2011 tax instructions   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. 2011 tax instructions An important factor is the comparison of time spent on personal activities with time spent on educational activities. 2011 tax instructions 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. 2011 tax instructions Example 1. 2011 tax instructions John works in Newark, New Jersey. 2011 tax instructions He traveled to Chicago to take a deductible 1-week course at the request of his employer. 2011 tax instructions His main reason for going to Chicago was to take the course. 2011 tax instructions While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. 2011 tax instructions Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. 2011 tax instructions He cannot deduct his transportation expenses of going to Pleasantville. 2011 tax instructions He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. 2011 tax instructions Example 2. 2011 tax instructions Sue works in Boston. 2011 tax instructions She went to a university in Michigan to take a course for work. 2011 tax instructions The course is qualifying work-related education. 2011 tax instructions She took one course, which is one-fourth of a full course load of study. 2011 tax instructions She spent the rest of the time on personal activities. 2011 tax instructions Her reasons for taking the course in Michigan were all personal. 2011 tax instructions Sue's trip is mainly personal because three-fourths of her time is considered personal time. 2011 tax instructions She cannot deduct the cost of her round-trip train ticket to Michigan. 2011 tax instructions She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. 2011 tax instructions Example 3. 2011 tax instructions Dave works in Nashville and recently traveled to California to take a 2-week seminar. 2011 tax instructions The seminar is qualifying work-related education. 2011 tax instructions While there, he spent an extra 8 weeks on personal activities. 2011 tax instructions The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. 2011 tax instructions Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. 2011 tax instructions He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. 2011 tax instructions Cruises and conventions. 2011 tax instructions   Certain cruises and conventions offer seminars or courses as part of their itinerary. 2011 tax instructions Even if the seminars or courses are work related, your deduction for travel may be limited. 2011 tax instructions This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. 2011 tax instructions   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. 2011 tax instructions 50% limit on meals. 2011 tax instructions   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. 2011 tax instructions If you were reimbursed for the meals, see How To Treat Reimbursements , later. 2011 tax instructions   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. 2011 tax instructions Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. 2011 tax instructions Example. 2011 tax instructions You are a French language teacher. 2011 tax instructions While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. 2011 tax instructions You chose your itinerary and most of your activities to improve your French language skills. 2011 tax instructions You cannot deduct your travel expenses as education expenses. 2011 tax instructions 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. 2011 tax instructions No Double Benefit Allowed You cannot do either of the following. 2011 tax instructions Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. 2011 tax instructions Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. 2011 tax instructions See Adjustments to Qualifying Work-Related Education Expenses, next. 2011 tax instructions Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. 2011 tax instructions You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. 2011 tax instructions Tax-free educational assistance. 2011 tax instructions   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 2011 tax instructions Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2011 tax instructions Amounts that do not reduce qualifying work-related education expenses. 2011 tax instructions   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 2011 tax instructions Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. 2011 tax instructions How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. 2011 tax instructions There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. 2011 tax instructions You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. 2011 tax instructions Note. 2011 tax instructions The following rules about reimbursement arrangements also apply to expense allowances received from your employer. 2011 tax instructions Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. 2011 tax instructions Your expenses must have a business connection. 2011 tax instructions This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. 2011 tax instructions You must adequately account to your employer for your expenses within a reasonable period of time. 2011 tax instructions You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. 2011 tax instructions If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. 2011 tax instructions If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. 2011 tax instructions Accountable plan rules not met. 2011 tax instructions   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. 2011 tax instructions Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). 2011 tax instructions Expenses equal reimbursement. 2011 tax instructions   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. 2011 tax instructions Because your expenses and reimbursements are equal, you do not have a deduction. 2011 tax instructions Excess expenses. 2011 tax instructions   If your expenses are more than your reimbursement, you can deduct your excess expenses. 2011 tax instructions This is discussed later, under Deducting Business Expenses . 2011 tax instructions Allocating your reimbursements for meals. 2011 tax instructions   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. 2011 tax instructions If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. 2011 tax instructions Make the allocation as follows. 2011 tax instructions Divide your meal expenses by your total expenses. 2011 tax instructions Multiply your total reimbursement by the result from (1). 2011 tax instructions This is the allocated reimbursement for your meal expenses. 2011 tax instructions Subtract the amount figured in (2) from your total reimbursement. 2011 tax instructions The difference is the allocated reimbursement for your other expenses of qualifying work-related education. 2011 tax instructions Example. 2011 tax instructions Your employer paid you an expense allowance of $2,000 under an accountable plan. 2011 tax instructions The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. 2011 tax instructions There was no indication of how much of the reimbursement was for each type of expense. 2011 tax instructions Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). 2011 tax instructions Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. 2011 tax instructions   1. 2011 tax instructions $425 meal expenses  $2,500 total expenses = . 2011 tax instructions 17   2. 2011 tax instructions $2,000 (reimbursement)×. 2011 tax instructions 17     =$340 (allocated reimbursement for meal expenses)   3. 2011 tax instructions $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). 2011 tax instructions After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). 2011 tax instructions Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. 2011 tax instructions You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. 2011 tax instructions This is discussed later under Deducting Business Expenses . 2011 tax instructions An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. 2011 tax instructions Reimbursements for nondeductible expenses. 2011 tax instructions   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. 2011 tax instructions You must include them in your income. 2011 tax instructions For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. 2011 tax instructions   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. 2011 tax instructions Deducting Business Expenses Self-employed persons and employees report their business expenses differently. 2011 tax instructions The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. 2011 tax instructions Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). 2011 tax instructions If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. 2011 tax instructions See the instructions for the form you file for information on how to complete it. 2011 tax instructions Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. 2011 tax instructions If either (1) or (2) applies, you can deduct the total qualifying cost. 2011 tax instructions If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. 2011 tax instructions In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 2011 tax instructions (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. 2011 tax instructions ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. 2011 tax instructions Form 2106 or 2106-EZ. 2011 tax instructions   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. 2011 tax instructions Form not required. 2011 tax instructions   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. 2011 tax instructions   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 2011 tax instructions (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. 2011 tax instructions ) Using Form 2106-EZ. 2011 tax instructions   This form is shorter and easier to use than Form 2106. 2011 tax instructions Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. 2011 tax instructions   If you do not meet both of these requirements, use Form 2106. 2011 tax instructions Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. 2011 tax instructions Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. 2011 tax instructions You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. 2011 tax instructions You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . 2011 tax instructions For more information on qualified performing artists, see chapter 6 of Publication 463. 2011 tax instructions Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. 2011 tax instructions They are not subject to the 2%-of-adjusted-gross-income limit. 2011 tax instructions To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . 2011 tax instructions For more information on impairment-related work expenses, see chapter 6 of Publication 463. 2011 tax instructions Recordkeeping You must keep records as proof of any deduction claimed on your tax return. 2011 tax instructions Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. 2011 tax instructions If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. 2011 tax instructions However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. 2011 tax instructions Examples of records to keep. 2011 tax instructions   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. 2011 tax instructions You should keep adequate records or have sufficient evidence that will support your expenses. 2011 tax instructions Estimates or approximations do not qualify as proof of an expense. 2011 tax instructions Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. 2011 tax instructions , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. 2011 tax instructions Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. 2011 tax instructions Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. 2011 tax instructions Complete information about any scholarship or fellowship grants, including amounts you received during the year. 2011 tax instructions Illustrated Example Victor Jones teaches math at a private high school in North Carolina. 2011 tax instructions He was selected to attend a 3-week math seminar at a university in California. 2011 tax instructions The seminar will improve his skills in his current job and is qualifying work-related education. 2011 tax instructions He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. 2011 tax instructions Victor will file Form 1040. 2011 tax instructions His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. 2011 tax instructions He shows his expenses for the seminar in Part I of the form. 2011 tax instructions He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. 2011 tax instructions He enters $400 on line 4 for his tuition and books. 2011 tax instructions On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. 2011 tax instructions He multiplies that amount by 50% and enters the result, $263, on line 5. 2011 tax instructions On line 6, Victor totals the amounts from lines 3 through 5. 2011 tax instructions He carries the total, $2,313, to Schedule A (Form 1040), line 21. 2011 tax instructions Since he does not claim any vehicle expenses, Victor leaves Part II blank. 2011 tax instructions His filled-in form is shown on the next page. 2011 tax instructions This image is too large to be displayed in the current screen. 2011 tax instructions Please click the link to view the image. 2011 tax instructions Form 2106-EZ for V. 2011 tax instructions Jones Prev  Up  Next   Home   More Online Publications