Are Training Expenses Tax-Deductible?

Training Required by Law

Training expenses that are required by local, state or federal laws are generally tax-deductible. According to the Internal Revenue Service, qualifying work-related education expenses can be deducted only if they are required to keep a job or improve skills necessary to work. Examples include regular training expenses like CPR requirements, equipment operator certifications and legally required continuing education. Training expenses must also serve a business purpose of an employer to qualify as deductible work-related education expenses.

In addition, tax deductions are permitted for training expenses that maintain or improve skills necessary to a job. Training to improve or maintain skills may not be required by law, but they might be necessary to continue to competently meet work demands. These expenses are only deductible if they are used for present work, so training that qualifies an employee for a promotion or a new job cannot be claimed on income tax returns. Employees may also claim education expenses as work-related if they took time off from work to complete them, so long as they did not leave work for more than a year.

The federal government does not allow training costs that are necessary to meet minimum job requirements, or to qualify for a new job, to be deducted on income tax returns as an expense. Nonetheless, credits are available to help offset the costs of pursuing education that expands an employee's career opportunities. One example is the American Opportunity Credit, which allows individuals and families to claim a tax credit of up to $2,500 if they paid tuition or fees for higher education during the 2009 and 2010 tax years.

Another way to deduct training expenses on tax returns is to claim the student tuition and fees tax deduction. This deduction differs from work-related education expense deductions because it is not itemized as a business expense. A taxpayer cannot claim the student tuition and fees deduction if she has already claimed the American Opportunity Credit. The tuition and feeds deduction can be claimed alongside the business expense deduction for work-related education, but the same expenses cannot be claimed for both deductions. Student loan interest is also deductible, but expenses paid for by grants, scholarships or fellowship awards cannot be claimed.