Smart back-to-school money moves for grown-ups, part 2

Mar 10, 2010 10:08 AM

Yesterday we looked at employer-paid educational assistance programs, a nice perk if you're eligible for one. Today, the basic rules for deducting your expenses if you have to pay them yourself:

If you’re currently working, any educational expenses you pay out of your own pocket may be tax deductible as long as the goal is to sharpen your skills for your current line of work rather than to prepare you for a new one. So if you’re an architect, for example, a course in designing “green” buildings might qualify, but one that taught you how to make balloon animals probably wouldn’t. Sorry.

If you’re self-employed, you can deduct these expenses on Schedule C. If you’re on somebody else’s payroll, you have to use the less-generous Schedule A, which lets you write off only the portion of your miscellaneous expenses, including educational ones, that exceeds 2 percent of your adjusted gross income.

Tomorrow: More back-to-school tax breaks.

—Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

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