Generally, the cost of an education that qualifies you for a new trade or business is not deductible. That's why the cost of medical school, dental school, and law school aren't deductible.



The cost of an education that improves your skills in your current trade or business is deductible. Since general dentists are allowed to provide the same services as dental specialists, then it can be argued that completing your studies in your speciality does not qualify you for a new trade or business; but instead, studying a dental specialty improves a dentist's skills in his or her current profession.



Based on that reasoning, it's common for your colleagues to deduct the cost of their specialty.



As to the $3,000 deduction, you're referring to the new deduction allowed to people who have incurred qualified higher education expenses, even if the course of study qualifies them for a new trade or business. You'll claim your expenses that exceed the new $3,000 deduction (and exceed whatever costs you claim for the lifetime learning credit) as a deductible professional expense either on the Schedule C if you earned income as an independent contractor during the year, or as a miscellaneous itemized deduction if you were compensated as an employee during the year.

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Replying to:

I plan to deduct tuition payed for a dental specialty training program under miscellaneous deductions, but heard that only a maximum of $3,000 can be deducted in 2002. Is this true? I'm paying a lot more than that for tuition!

Zip Code: cpa@mdtaxes.com

Thanks for the clarification.



What if I claimed the lifetime learning credit for the first $5,000 in tuition, and the rest as an itemized professional expense? Is this legal?



Also, I have both independent contractor and employee income; I figured I wouldn't deduct the tuition from my self employment income because the education is not necessary for me to be self employed, but it is necessary for me to mainatin my job as a resident. Is this the proper perspective?



Thanks for all of your help.

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Replying to:

Generally, the cost of an education that qualifies you for a new trade or business is not deductible. That's why the cost of medical school, dental school, and law school aren't deductible.



The cost of an education that improves your skills in your current trade or business is deductible. Since general dentists are allowed to provide the same services as dental specialists, then it can be argued that completing your studies in your speciality does not qualify you for a new trade or business; but instead, studying a dental specialty improves a dentist's skills in his or her current profession.



Based on that reasoning, it's common for your colleagues to deduct the cost of their specialty.



As to the $3,000 deduction, you're referring to the new deduction allowed to people who have incurred qualified higher education expenses, even if the course of study qualifies them for a new trade or business. You'll claim your expenses that exceed the new $3,000 deduction (and exceed whatever costs you claim for the lifetime learning credit) as a deductible professional expense either on the Schedule C if you earned income as an independent contractor during the year, or as a miscellaneous itemized deduction if you were compensated as an employee during the year.

--- --- --- --- --- --- --- --- ---

Replying to:

I plan to deduct tuition payed for a dental specialty training program under miscellaneous deductions, but heard that only a maximum of $3,000 can be deducted in 2002. Is this true? I'm paying a lot more than that for tuition!

Zip Code: rm910@columbia.edu

Whatever tuition (and requisite travel and books, etc.) is left after the first $5,000, can be allocated proportionately between W2 and Schedule C.

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Replying to:

Thanks for the clarification.



What if I claimed the lifetime learning credit for the first $5,000 in tuition, and the rest as an itemized professional expense? Is this legal?



Also, I have both independent contractor and employee income; I figured I wouldn't deduct the tuition from my self employment income because the education is not necessary for me to be self employed, but it is necessary for me to mainatin my job as a resident. Is this the proper perspective?



Thanks for all of your help.

--- --- --- --- --- --- --- --- ---

Replying to:

Generally, the cost of an education that qualifies you for a new trade or business is not deductible. That's why the cost of medical school, dental school, and law school aren't deductible.



The cost of an education that improves your skills in your current trade or business is deductible. Since general dentists are allowed to provide the same services as dental specialists, then it can be argued that completing your studies in your speciality does not qualify you for a new trade or business; but instead, studying a dental specialty improves a dentist's skills in his or her current profession.



Based on that reasoning, it's common for your colleagues to deduct the cost of their specialty.



As to the $3,000 deduction, you're referring to the new deduction allowed to people who have incurred qualified higher education expenses, even if the course of study qualifies them for a new trade or business. You'll claim your expenses that exceed the new $3,000 deduction (and exceed whatever costs you claim for the lifetime learning credit) as a deductible professional expense either on the Schedule C if you earned income as an independent contractor during the year, or as a miscellaneous itemized deduction if you were compensated as an employee during the year.

--- --- --- --- --- --- --- --- ---

Replying to:

I plan to deduct tuition payed for a dental specialty training program under miscellaneous deductions, but heard that only a maximum of $3,000 can be deducted in 2002. Is this true? I'm paying a lot more than that for tuition!

Zip Code: Westchester@mdtaxes.com