Generally, you cannot deduct education and training expenses for yourself, your spouse (if married) or your dependent as a business expense unless the education or training:

• Maintains or improves a skill required in a trade or business you are currently engaged in,
• Meets the express requirements of your employer, or
• Meets the requirements of law or regulations which are conditions of continuing your employment.

You may be able to deduct qualified higher education tuition and related expenses that you pay beginning in 2002. You do not have to itemize to take this deduction. Qualified expenses are the same as for the Hope Scholarship Credit. Refer to Tax Topic 605 or Publication 970 (PDF), Tax Benefits for Higher Education.

You are not eligible to claim both the deduction and a Hope Scholarship Credit or Lifetime Learning Credit in the same year for the same student. You cannot claim the deduction for expenses that you have paid with a tax-free distribution from a Coverdell education savings account, tax-free savings bond interest, or a tax-free scholarship, fellowship, or grant. The same rule applies to expenses you pay with a distribution from a qualified state tuition plan, except that you can deduct qualified expenses you pay with that part of the distribution that is a return of your contributions to the plan. Refer to Tax Topic 310Tax Topic 403Tax Topic 421.

In 2002 and 2003 if your adjusted gross income does not exceed $65,000 ($130,000 if married filing jointly) you are entitled to a maximum deduction of $3,000 per year. If your adjusted gross income is greater than these amounts you may not take this deduction.

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