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| Tax School Homepage |
| 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. Additionally, your work-related education expenses may also qualify you for other tax benefits, such as the tuition and fees deduction and the lifetime learning credit. To claim a business deduction for work-related education, you must be working and must itemize your deductions on Schedule A of Form 1040 if you are an employee. However, if you are a self-employed individual, you would file Schedule C (Form 1040), Schedule C-EZ or Schedule F if you are a farmer or fisherman. To claim the credit, you must also have expenses for education that meet the requirements for qualifying work-related education. |
| You can deduct the costs of qualifying work-related education as business expenses. Remember that this is education that that 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. Also this education is education that maintains or improves skills needed in your present work. Generally this would not be education that qualifies you for a new profession. Even if the education meets one or both of the qualifying 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 if it is part of a program of study that will qualify you for a new trade or business. However, you can deduct the costs of qualifying work-related education as a business expense even if the education could lead you to a degree. |
| A scholarship or fellowship is tax free if you are a candidate for a degree at an eligible educational institution and you you use the scholarship or fellowship to pay qualified education expenses. |
| Should you Itemize? |
| Generally, you must decide whether to itemize deductions or to use the standard deduction. You should itemize deductions if your allowable itemized deductions are greater than your standard deduction. Some taxpayers must itemize deductions because they cannot use the standard deduction. For example, you cannot use the standard deduction if you are married filing as married filing separately, and your spouse itemizes deductions. In this case you must also itemize your deductions regardless if the result is less than any of the standard deductions. |
| Therefore, you cannot use the standard deduction if you are married filing as married filing separately, and your spouse itemizes deductions. If you are filing a tax return for a period of less than 12 months because of a change in your annual accounting method then your standard deduction would also be zero or cannot be used at all. Nonresident aliens or dual-status aliens are also prohibited from using the standard deduction. You may benefit from itemizing your deductions on Form 1040, Schedule A if you had large unreimbursed employee business expenses, had large uninsured medical and dental expenses or if you had large uninsured casualty or theft losses, or made large charitable contributions. |
| Deductible Taxes |
| There are many types of deductible non-business taxes such as state, local and foreign income taxes, local personal property taxes and general sales taxes. However, the deduction for state and local general sales taxes is no longer available for tax years after 2013. So to recap, the deduction for state and local general sales taxes expired December 31, 2013. So before this, you can elect to deduct state and local general sales taxes instead of state and local income taxes. If you elect to deduct state and local general sales taxes, you can use either your actual expenses or the optional sales tax tables. |
| Deductible real estate taxes are generally any state, local, or foreign taxes on real property levied for the general public welfare. Additionally, the deductible real estate taxes must be charged uniformly against all real property in the jurisdiction at a like rate. Furthermore, deductible personal property taxes are those based only on the value of personal property such as a boat or car. In addition, the tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year. |
| Home Mortgage Points |
| Points are considered prepaid interest and may be deductible as home mortgage interest, if you itemize deductions on Schedule A (of Form 1040). As a result, you may be able to deduct all of the points paid on the mortgage if you can deduct all of the interest on your mortgage. You can deduct the points in full in the year they are paid, if you are using the cash method of accounting and paying points is an established business practice in your area. |
| Copyright © 2014 [Hera's Income Tax School]. All Annual Filing Season Program rights reserved. |
| Revised: 12/14/14 |
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