Many people refer to education as “the best investment that you’ll ever make.” There is no doubt that education has played an important role in many successful careers. Education can help guide you towards a successful career. Education can also open up some incredible networking opportunities. Education can be quite expensive, as well. If you are self-employed, you may have wondered aloud: “Can I write off my education as a business expense?”
The answer is a bit complicated. However, it’s understandable that more entrepreneurs and students are wondering, “Can I write off my education as a business expense?” After all, education is only getting more expensive. In the United States, college costs rose over 25% in the past ten years alone. However, this article refers to work-related education.
The short answer is that: yes, the tax code allows for an individual taxpayer to deduct educational expenses. However, there are some guidelines. The taxpayer should be able to prove that the education “maintains or improves” their job skills. They must either be self-employed or an employee of some kind. You can also deduct the education expenses if your employer or law requires that you do so. In many cases, this refers to education related to a license to practice, or a status.
Before you finish asking, “Can I write off my education as a business expense?” You should understand that there are limits. What won’t work? Well, if you are interested in learning a subject that has absolutely nothing to do with your current job – it won’t be deductible whatsoever. Also, you cannot deduct education that qualifies you for a different profession. If your job requires that you meet specific minimum education requirements, those education expenses are not deductible.
The Tax Cuts And Jobs Act
We cannot talk about the question of “Can i write off my education as a business expense?” without taking into consideration the Tax Cuts And Jobs Act (TCJA). For those who don’t know, the TCJA is an act that was meant to reduce taxes for businesses. It also had implications much beyond that, and it was passed in 2017.
What does this mean? It means that you cannot write off your tuition education expenses as much as you could in the past. Specifically, an individual can no longer write off their MBA tuition on their Schedule A other miscellaneous deductions as was allowed in pre TCJA.
For The Self-Employed
It can be extremely important for self-employed entrepreneurs to remain ahead of the curve and understand your sector, industry, or market. That’s one of the reasons why education expenses remain 100% deductible for the self-employed. It makes sense that self-employed taxpayer take advantage of this deduction. They can deduct any web courses, materials, or books on subjects that are relevant to their work.
Believe it or not, your mba costs can be deductible. There’s one catch, however. You can deduct mba costs if you have already established yourself in your profession. Let’s say that you are a self-employed business consultant. You might use the knowledge from your MBA in your career. You can then deduct the cost of your MBA against your income. This is a huge plus for the self-employed, considering that tax deductions for MBA students have changed dramatically recently.
However, it should be noted that these deductions must be within reason. For example, you cannot deduct your continuing education expenses and claim that you are interested in “lifetime learning.” The IRS will likely not allow any of these expenses to be deducted if you are ever audited.
What Is An Education Expense?
It might take some time and effort to figure out EXACTLY what can be deducted. It’s also important to remember that education expenses are about more than tuition. It can cost a lot to learn about a particular field, trade, or industry – and you might be able to deduct more than you think. Here are some more education expenses to consider.
Technology has changed the way that students learn in the modern world. What does this mean for you and your taxes? You can deduct any subscriptions to trade publications that can help you learn more about your field. You can also deduct any relevant books that are tailored to your industry. If you choose to attend a seminar or webinar related to what you are studying, it can be deducted. Any classes and/or workshops are obviously deducted. Also, remember that your transportation costs can be deducted, as well!
In short, here are education expenses you can deduct:
- Trade publications
For travel, the standard mileage rate can be applied to motor vehicles. If the education lasts for over a year, then the taxpayer can only write off transportation expenses for one year. The only exception is if the taxpayer is traveling DIRECTLY from work to school. For overnight trips related to education, travel and lodging is deductible. Meals are also deductible, but subject to the standard cost limitations.
The answer to the question, “Can I write off my education as a business expense?” is yes. However, there are limitations. Learn more about writing off your continuing education expenses by talking to an experienced CPA. Learn more about how we can help by requesting a free five-minute consultation or reviewing our FAQ section.