As an employee, you may require additional training, or be expected to participate in mandatory seminars. In some of these cases, you may acquire expenses that you have to pay. Thankfully, there’s a chance these expenses may qualify for a deduction at tax time. In order to be deducted, the expenses have to be related to improving or maintaining your skills at your job, or be required by law to stay in your current position. The training can’t be a general skill that can qualify you for another job or a new industry, otherwise it isn’t deductible.
Expenses can only be deducted if they relate to your current job, though if you are laid off, on leave, or some other period of absence, there’s a possibility you can still claim a deduction. When you return to work, you have to accept the same position or field that you were in previously. Temporary absences are those that last less than a year.
Some expenses related to employee training that are deductible include:
- Supplies, books, class fees, lab fees, and other incidentals
- Travel and transportation costs relating to the training
- Research that accrues expenses
As an employee, you should deduct training expenses using Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. You’ll need to deduct them as a miscellaneous itemized deduction, which makes them subject to the 2% adjusted gross income limitation.
Self-employed taxpayers can file Form 1040, Schedule C, Profit or Loss from Business, Form 1040, Schedule C-EZ, Net Profit from Business, or Form 1040, Schedule F, Profit or Loss from Farming.
If your employer offered educational assistance to you, it will be reported on your W-2 and if the reimbursement is taxable in accordance with your income, it will be listed on the W-2.