Tax Tips: Education Deductions

You can deduct as a business expense on Schedule A the cost of education that is (1) expressly required by an employer, by law or by government regulation or (2) maintains or improves skills required in your current trade or business.

The education is not deductible if it is the minimum requirement for a trade or business or if it prepares you for a new trade or business, even if you do not intend to enter that trade or business.

The education can be a one-time class, workshop or seminar. Every year, I attend several seminars on federal and state tax law that range from a half of a day to four days. These seminars are a deductible business expense because they update and expand knowledge that I need in my business as a professional tax preparer.

Or it can be a program that could lead to a certificate or degree. While the cost of an undergraduate degree is generally not deductible, as it is often the minimum requirement for a position, graduate studies, including an MBA program, could qualify for a deduction depending on the individual facts and circumstances.

Deductible costs include:

  • Tuition, fees, books and supplies
  • Round-trip transportation (at 55 cents per mile for 2009 if you drive)
  • Meals (at 50%) and lodging while away from home
  • Lab fees, student cards, insurance and degree costs
  • Writing expenses for term papers and dissertations (i.e. research and typing).

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