Hi,

I am an F-1 student from India with work experience in a leading IT consultancy firm for 3.7 years where my job duties involved Software development.I have also done my Bachelor's in Information Technology.I have been doing my Masters in Information Systems at a University in Boston since Fall 2010.I have prepared my tax documents from H&R block and they have entered my education expenses for my courses in Spring 2011 as Work Related Education Expense in Schedule A of 1040NR with field as Information Tech.I have also done a Co-op(long term internship) in a leading Bank in its Technology Division as Technology Analyst Co-op (Actually a Seasonal Worker) (Software Development) from July to December in New Jersey.So I have this query regarding whether I can claim my education expense in this case.I had asked my consultant she said yes with the reason that "my education does match my field of business".
After reading the document Publication 970 Chapter 12 I was not able to clearly make out whether I can claim this expense.The master education I am doing now is definitely used for maintaining or improving my skills as well as I do qualify the rule "Education during temporary absence" of 1 year or less.My last date in TCS in India was July 13 whereas my Coop joining in Goldman Sachs was 11 July.Kindly let me know at the earliest whether I can claim this expense or not

Just to clarify the position is a Seasonal Employee (Which is treated as a Co-op on CPT by the company as it does not have a specific Co-op position)

It is my considered opinion that you CANNOT claim the tuition costs for the Master's degree as an employee business expense.

The reason is simple: Since you are on a F-1 visa, you are considered to be a "full-time" student currently in the United States for the sole purpose of getting an education. Hence, you are NOT an employee.

Given these facts, the IRS will automatically consider any argument that the education enhances your skills in your "current job" as INVALID because you do not HAVE a "current job".

Claiming the credit under Form 1040 with Form 2106 is risky enough to begin with, because the IRS examines such returns closely to ensure that they meet the criteria specified in IRS Pub 970.

If you claim the expenses under Form 1040NR with a Form 2106, it would be like waving a red flag before the IRS and screaming "AUDIT ME! AUDIT ME!", and when the audit coimes, you WILL lose!

Hi,
Thanks a lot for your reply.So can it be considered as a thumb rule that "Masters students with F-1 Visa cannot claim this deduction" or is there still some scope where it could be claimed.What if a student has an On campus job (where he works 20 hours per week) in his university where the work is related to his field (I do have an on campus job but my work is not related to the field but this can surely help other students)
The reason why I am asking this question is because many students are claiming that expense and almost every one is getting their taxes filed through a authorized consultant
Secondly failing an Audit does it mean that I will have to pay penalty or can I just file an amendment if prove other wise ?
Also I had another question may be it is out of scope of this forum but I will still ask nevertheless "if there are any in correct tax filings done by a student can it have any impact on a students future H1B sponsorship" ?

Yes, that IS an accurate rule of thumb.

Just because the return is being filed by an "authorized" consultant does not mean that the returns are correct, legal and accurate. That consultant will collect his fee (which I am sure is rather large) and then will be NOWHERE to be found when the IRS comes after the students for claiming this deduction.

Hi,
Thanks a lot for clarifying this and for your quick replies.In my case H&R block has specified that they will provide audit support but it seems it will be in a losing cause.Again thanks for your timely help

H & R Block WILL provide audit support, but that support is someone attending the audit with you to answer questions. They may even argue the logic of them submitting the Form 2106, but it will be a LOSING argument. I know this because I HAVE made the argument for a J-1 graduate student several years ago.