Online classes have become increasingly popular in recent years. They’re a flexible option that opens the door to pursuing a college degree, professional development, or simply seeking new knowledge for personal growth.
But the costs associated with online learning may lead you to wonder: Are online courses tax deductible? The short answer is: In some cases.
If an online course falls under the umbrella of work-related education expenses and meets certain requirements, it can be tax-deductible. However, only certain categories of taxpayers are eligible to claim these deductions.
Read on to learn how to determine if you can deduct your online classes and the education tax credits that could also help you save.
Table of Contents
Who is eligible for continued education tax deductions?Requirements for claiming education expensesWhat continuing education expenses are deductible?How to write off continuing education expensesYou may be eligible for education tax creditsGet help claiming your education deductionsWho is eligible for continued education tax deductions?
To deduct work-related education expenses like online classes on your federal taxes, your work must fall into one of the following categories:
- Self-employed individual
- Qualified performing artist
- Armed Forces reservist
- Fee-based state or local government official
- Disabled individual with impairment-related education expenses
Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, employees could also deduct unreimbursed job-related expenses—including work-related education costs—if the expenses exceeded 2% of their adjusted gross income (AGI). However, the TCJA suspended that deduction through 2025. There’s no word yet on whether Congress will extend or modify it.
Requirements for claiming education expenses
For online classes to qualify as deductible work-related education expenses, they must meet certain requirements and comply with a few restrictions.
Requirements
To qualify for a tax deduction, an education expense must either help you maintain or improve the skills you need in your current occupation or be legally required to maintain your status.
For example, if a self-employed software engineer took an advanced programming course to stay current with industry trends, the costs would be deductible. A self-employed accountant can typically write off the costs of mandatory continuing professional education (CPE) programs required to keep their license.
Restrictions
There are some restrictions. Even if you meet the above requirements, you can’t deduct any educational expenses for programs if it helps you meet the minimum requirements or basic education needed to enter your trade or business. Courses that qualify you for a new line of work are also ineligible.
For example, a real estate agent can’t write off the state-mandated pre-licensing course they must pass to become an agent. Additionally, they can’t write off a home inspection certification program that is taken to branch out and become a home inspector.
Note: If you pursue work-related education courses that meet the above requirements during a temporary leave from your business, it can be deductible if you return to the same general type of work within one year. These absences are considered temporary.
What continuing education expenses are deductible?
When work-related educational expenses qualify as tax write-offs, the IRS allows you to deduct the following:
- Tuition
- Books
- Supplies
- Lab fees
- Items similar to the above (presumably online course fees)
- Certain transportation and travel costs for in-person education
- Other educational expenses, such as the cost of research
However, you can’t deduct qualifying expenses that are paid for by other means, such as grants, employer-provided education assistance, or tax-free scholarships.
What educational institutions are eligible for tax deductions?
The IRS isn’t specific about the institutions you must attend or credentials you must obtain to qualify for work-related education expense deductions. If an online class meets the requirements in terms of its content and purpose, it likely qualifies.
To illustrate who might be eligible, the IRS gives an example of a TV, stereo, and radio repairperson who keeps up with the latest changes by taking special courses in radio and stereo service. You may be able to find courses that help you in your trade or business from colleges, individuals, and popular course platforms, such as:
- Udemy
- Coursera
- Skillshare
- Khan Academy
- LinkedIn Learning
Regardless of where you find a course, eligibility for a tax deduction will ultimately depend on its content and purpose.
How to write off continuing education expenses
The way you deduct work-related education expenses when filing your federal taxes depends on your situation. Here’s a quick guide:
- Self-employed workers: Deduct your expenses from your self-employment income on Schedule C (Form 1040) or Schedule F (Form 1040).
- Armed Forces reservists, local government officials, and performing artists: Deduct your expenses directly on Form 2106, which will flow into your Schedule 1 (Form 1040) and attach Form 2106.
- Disabled individuals: Deduct impairment-related education expenses as an itemized deduction on Schedule A (Form 1040) or Schedule A (1040-NR) and attach Form 2106.
If you’d rather not hassle with it, TurboTax can handle all the form filling for you.
You may be eligible for education tax credits
Along with education deductions, be sure to look into education tax credits for college students and those attending professional development courses. Tuition, fees, and other expenses related to your online classes may be covered as part of the American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit (LLC). Only courses that are taken at an eligible education institution qualify for the education credit.
The AOTC provides up to $2,500 per person per year for the first four years of post-secondary education. To qualify, you must be enrolled at least half-time in pursuit of a degree or other recognized credential from an eligible institution.
On the other hand, the LLC provides up to $2,000 per tax return any year you take at least one course, whether to learn job skills or as part of your post-secondary education.
Remember, you can’t take a deduction and then use the same education expenses to claim the education credit. It’s either one or the other.
Get help claiming your education deductions
If you plan to claim the work-related education expense tax deduction, it’s important to keep receipts for everything, including your classes, books, supplies, and other related expenses. These will help you accurately calculate your deductions and can serve as proof if ever needed. Aside from that, you’ll need to report the deductions on the applicable tax form required for your situation.
While filing taxes can be complex, TurboTax is here to make it stress-free. You don’t have to worry about finding all the right tax forms or figuring out which deductions you can get. Instead, you just answer simple questions about your situation. We’ll handle the rest. Ready to make tax season easier? File with TurboTax and get a 100% accuracy guarantee.
