• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Go back to school on business education

Get PDF file

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Are you planning to take a refresher course at a local school?

Strategy: Study the tax rules, and determine how much you can write off on your return.

Generally, you can deduct education costs as a business expense if you pass one of two tests:

  1. The education is required by your employer or by law to keep your current job.
  2. The education maintains or improves skills needed in your present work.

You can’t deduct any of your expenses—even if you qualify under either test—if the education is needed to meet the minimum educational requirements of your current job, profession or business, or it qualifies you for a new job, profession or business. However, if you’re taking courses just to brush up on new developments in your field, you should be OK.

What can you deduct? Expenses like tuition, books, laboratory fees, equipment and transportation between work and school. If you go to class directly after work, the cost is deductible. But you can’t deduct the travel costs if you stop at home for a bite to eat. However, the IRS will not let you deduct the cost of an undergraduate degree because that is presumed to automatically qualify you for a new profession or business.

Tip: Unreimbursed business education expenses are deductible as miscellaneous expenses subject to the usual floor of 2% of AGI.

Leave a Comment