There are quite a few opportunities for taxpayers to deduct the cost of dance classes. Students enrolled in an eligible institution can claim the cost of dance tuition and fees through either the tuition and fees deduction, the American Opportunity Tax Credit or the Lifetime Learning Credit. Employees taking dance classes for work purposes can write off the cost as an unreimbursed work expense. Hobbyists who teach dance classes can also write off some dance expenses.
Tuition and Fees Deduction
Students of any kind, including dance students, can typically write off the cost of tuition and fees. Under the tuition and fees tax deduction, students enrolled in one or more courses at an eligible institution may deduct qualified tuition expenses. According to the IRS, an eligible institution is any college, vocational school or post-secondary educational program that is eligible for a student aid program. Your program should be able to tell you if it is eligible. If it is, you can write off the cost of all mandatory tuition and fees the program charges. Supplies and equipment can be written off only if you must purchase them from the institution to enroll in classes.
Two alternatives to the tuition and fees deduction are the American Opportunity Tax Credit and the Lifetime Learning Credit. Although the eligibility standards are stricter for these credits, they offer you a bigger tax break. The American Opportunity credit is available to students in a degree or credential program during the first four years of post-secondary education. If a student has exhausted the four years of the American Opportunity credit, the Lifetime Learning Credit can be claimed instead. The maximum modified adjusted gross income an individual can have to claim these credits is $90,000 for the American Opportunity credit and $64,000 for the Lifetime Learning Credit.
Work-Related Dance Classes
If you're a professional dancer, you can usually deduct the cost of your dance classes. The IRS allows taxpayers to deduct the cost of classes and education that maintain job skills, improve job skills, or is required to maintain your current salary or job. If you're trying to break into the field but don't currently have a dance-related job, you don't qualify for this deduction. If you do qualify, you can deduct the cost of tuition, supplies, fees and travel cost as an unreimbursed work expense on Form 2106. Such expenses are deductible only to the extent they exceed 2 percent of your adjusted gross income.
Dance Classes as a Hobby Expense
If you occasionally teach dance as a hobby but it's not your primary occupation, you can often deduct the cost of dance classes as a hobby expense. According to the IRS, a hobby is an activity in which you are paid and earn revenue but you're not actively attempting to turn a profit. As a rule of thumb, if you haven't turned a profit in two out of the last five tax years, it's a hobby. Any fees, tuition, supplies and equipment you purchase for classes you teach or classes you take are hobby expenses. Hobby expenses are deductible to the point that you have hobby income. For example, if you made $400 teaching dance classes, you can record up to $400 in hobby expenses. You'll only receive a deduction for hobby expenses that exceed 2 percent of your adjusted gross income. Record hobby expenses as "other expenses" on line 23 of Schedule A
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