Earned income includes all amounts received as wages, tips, bonuses, other employee compensation, and self-employment income, whether in the form of money, services, or property. Earned Income Credit A refundable tax credit for qualified taxpayers based on earned income and modified adjusted gross income. Education Expense Employees may deduct education expenses if the expenses are incurred either to maintain or improve existing job-related skills or to meet the express requirements of the employer or legal requirements to retain current employment status. Such expenses are not deductible if the education is required to meet the minimum educational requirements for the taxpayer's job or if the education qualifies the taxpayer for a new trade or business. Education expenses may also qualify the taxpayer for the Hope scholarship credit or the lifetime learning credit, both of which are defined elsewhere in this glossary.
Contributions are nondeductible.
Earnings are tax free and withdrawals are also tax free if used to pay for qualified higher education expenses. The right of a government authority to take private property for public use and paying fair compensation to the owner. Employee For income tax purposes, an employee is to be distinguished from an independent contractor. This is important, because the withholding of income taxes on wages applies only to employees. Also, employee status will affect the manner and extent of some deductions and credits.