Page 62

Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination aren't quali- fying work-related education. They are part of a program of study that can qualify you for a new profession. Teaching and Related Duties All teaching and related duties are considered the same general kind of work. A change in duties in any of the fol- lowing ways isn't considered a change to a new business. • Elementary school teacher to secondary school teacher. • Teacher of one subject, such as biology, to teacher of another subject, such as art. • Classroom teacher to guidance counselor. • Classroom teacher to school administrator. What Expenses Can Be Deducted? If your education meets the requirements described ear- lier under Qualifying Work-Related Education, you may be able to deduct your education expenses as business ex- penses. If you aren't self-employed, you can deduct busi- ness expenses only if you are an Armed Forces reservist, qualified performing artist, fee-based state or local gov- ernment official, or, for impairment-related expenses, an individual with a disability. You can't deduct expenses related to tax-exempt and excluded income. Deductible expenses. The following education expen- ses can be deducted. • Tuition, books, supplies, lab fees, and similar items. • Certain transportation and travel costs. • Other education expenses, such as costs of research and typing when writing a paper as part of an educa- tional program. Nondeductible expenses. You can't deduct personal or capital expenses. For example, you can't deduct the dollar value of vacation time or annual leave you take to attend classes. This amount is a personal expense. Unclaimed reimbursement. If you don't claim reim- bursement that you are entitled to receive from your em- ployer, you can't deduct the expenses that apply to that unclaimed reimbursement. Example. Your employer agrees to pay your educa- tion expenses if you file a voucher showing your expen- ses. You don't file a voucher and you don't get reim- bursed. Because you didn't file a voucher, you can't deduct the expenses on your tax return. Transportation Expenses If your education qualifies, you can deduct local transpor- tation costs of going directly from work to school. 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. Temporary basis. You go to school on a temporary ba- sis if either of the following situations applies to you. 1. Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. 2. Initially, your attendance at school is realistically ex- pected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Your attendance is temporary up to the date you determine it will last more than 1 year. If you are in either situation (1) or (2), your attendance isn't temporary if facts and circumstances indicate otherwise. Attendance not on a temporary basis. You don't go to school on a temporary basis if either of the following sit- uations applies to you. 1. Your attendance at school is realistically expected to last more than 1 year. It doesn't matter how long you actually attend. 2. Initially, your attendance at school is realistically ex- pected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Your attendance isn't temporary after the date you determine it will last more than 1 year. Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the roundtrip costs of transportation between your home and school. This is true regardless of the location of the school, the distance traveled, or whether you attend school on non- work days. Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Transportation expenses don't include amounts spent for travel, meals, or lodging while you are away from home overnight. Example 1. You regularly work in a nearby town, and go directly from work to home. You also attend school ev- ery work night for 3 months to take a course that improves your job skills. Since you are attending school on a tempo- rary basis, you can deduct your daily roundtrip transporta- tion expenses in going between home and school. This is true regardless of the distance traveled. Example 2. Assume the same facts as in Example 1, except that on certain nights you go directly from work to Page 62 Chapter 11 Business Deduction for Work-Related Education