Question
My employer paid me additional compensation to cover my graduate school tuition, paid the tuition directly to the graduate school, and included it on my W-2 as wages. The program improves skills needed in my current field of employment but doesn't qualify me for a new trade or business. Can I claim this educational expense on my tax return and, if so, where do I claim the expense?
Answer
Because you received the additional compensation as wages, you're treated as paying the tuition yourself out-of-pocket. To determine if you can claim the educational expense, and, if so, where to claim it on your return, review the rules for the lifetime learning credit.
Also review your eligibility for taking the expense as an adjustment to income for a qualified performing artist and/or fee-basis official on your tax return. See the Instructions for Form 1040 (and Form 1040-SR) or Instructions for Form 1040-NR. You may need to attach Form 2106, Employee Business Expenses.
See Publication 970, Tax Benefits for Education for a full list.
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