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principal or interest on any qualified education loan you in- curred for your education. See Educational assistance benefits. Introduction If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer shouldn’t include those bene- fits with your wages, tips, and other compensation shown in box 1 of your Form W-2. This also means that you don’t have to include the benefits on your income tax return. You can’t use any of the tax-free education ex- penses paid for by your employer as the basis for any other deduction or credit, including the Ameri- can opportunity credit and lifetime learning credit. Educational assistance program. To qualify as an edu- cational assistance program, the plan must be written and must meet certain other requirements. Your employer can tell you whether there is a qualified program where you work. Educational assistance benefits. Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. Edu- cation generally includes any form of instruction or training that improves or develops your capabilities. The pay- ments don't have to be for work-related courses or cour- ses that are part of a degree program. Tax-free educational assistance benefits also include payments made after March 27, 2020, and before January 1, 2026, whether paid to the employee or to a lender, of principal or interest on any qualified education loan (de- fined later) incurred by the employee for education of the employee. Educational assistance benefits don't include payments for the following items. 1. Meals, lodging, or transportation. 2. Tools or supplies (other than textbooks) that you can keep after completing the course of instruction. 3. Courses involving sports, games, or hobbies unless they: a. Have a reasonable relationship to the business of your employer, or b. Are required as part of a degree program. Qualified education loan. A qualified education loan is generally the same as a qualified student loan. See Quali- fied Student Loan in chapter 4. However, as discussed earlier, the loan must be incurred by the employee for ed- ucation of the employee. Benefits over $5,250. If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages CAUTION ! (box 1 of Form W-2) the amount that you must include in income. Working condition fringe benefit. However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer doesn't have to include them in your wages. A working condition fringe benefit is a ben- efit that, had you paid for it, would be allowable as a busi- ness expense deduction. For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Pub. 15-B, Employer's Tax Guide to Fringe Benefits. 11. Business Deduction for Work-Related Education What's New Standard mileage rate. Generally, if you claim a busi- ness 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, 2021, through December 31, 2021, is 56 cents a mile. For more information, see Transportation Expenses under What Expenses Can Be Deducted. Reminders Miscellaneous itemized deductions. For tax years be- ginning after 2017 and before 2026, you no longer deduct work-related education expenses as a miscellaneous itemized deduction subject to a 2%-of-adjusted-gross-in- come floor. Introduction This chapter discusses work-related education expenses you may be able to deduct as business expenses. To claim such a deduction, you must: • File Schedule C (Form 1040), Profit or Loss From Business, or Schedule F (Form 1040), Profit or Loss From Farming, if you are self-employed; • File Form 2106, Employee Business Expenses, if you are an Armed Forces reservist, a qualified performing artist, a fee-based state or local government official, or an individual with a disability claiming impairment-rela- ted education expenses; • Itemize your deductions on Schedule A (Form 1040) or Schedule A (Form 1040-NR), if you are an Chapter 11 Business Deduction for Work-Related Education Page 59