Generally no, unless for business related education or training. You may deduct the cost of qualifying business related education as business-related expenses. This is usually education that meets at least one of the two tests established by the IRS: (a) if your employer provides it, then it is an employee benefit; (b) if the law requires it, then it is a business expense. To qualify, your education must be directly related to the services you perform as a business owner, employee, partner or manufacturer. It cannot be a course taken for a business-related education or training.
Business-related education and training generally include: management knowledge, new trade skills, sales and marketing techniques, and basic accounting and computer software. Any education that is conducted primarily for the benefit of improving your business will qualify as business-related education and training. Examples are: (a) courses and seminars offered by government, university or other nonprofit organizations to teach business principles and strategies, (b) trade schools which specialize in marketing, (c) professional associations which provide continuing education for members to keep them up to date on industry developments, (d) seminars and workshops on new trends in business, and (e) any other educational program which directly aids in preparing you for your new profession. You cannot deduct business-related education and training as a business expense if you are using it for your own business. However, you may be able to claim expenses related to specific training programs, seminars or workshops that were used to enhance your ability to do a specific job.
When you begin the process of claiming deductions, you will need to determine whether your business-related education and training to qualify as a qualifying work-related education or business expense. If it does, then you will need to add the cost of your education to the amount you already have deducted. If it does not, then you must include the cost of your education and only if your education and training primarily benefit the business you conduct (or are applying to the business to further the profitability of such business). The amount you deduct will depend on several factors, including the purpose of your education and training, the nature of your business, and the number of people who received training or education from you.
There are several ways taxpayers can reduce their education costs. They include getting an education from an employer, taking certain classes online, or completing a certificate program. In addition, if you are self-employed, you can also deduct a portion of your income tax due to your education expenses. If you took education courses at a community college, you can also depreciate the cost of your education cost through the establishment factor.
One important item to note about education expenses is that they cannot be claimed with the personal exemption or the business exemption on their own tax return. Education expenses are always considered deductible business expenses, even if they are taken out of a personal purse. However, when these types of deductions are applied to income tax, the IRS has established a number of standard deduction qualifications. These qualifications are based on the taxpayer’s adjusted gross income, filing status and their state tax returns.
The following are some of the educational qualification qualifying factors used by the IRS in determining whether taxpayers can apply for a MBB deduction: The taxpayer maintains either a principal place of business or an office. The taxpayer also takes part in any particular trade or business conducted in a particular state or under a specific agreement with a state, county or municipality. An owner of a trade or business who has received an award from a state, county or municipality can qualify for the MBB. The qualification requirements for state and local governments differ somewhat.
In order to qualify for the MBB, there are several other conditions that must be met. Some of these conditions include a taxpayer has been continuously employed for one year or more, the value of education in connection with work performed is at least certain and not over the limit, and the business qualifies for tax relief under section 162. Taxpayers may deduct expenses incurred in education related to professional development and teaching. They can also deduct expenses related to travel, meetings, and publications.
There are several basic factors that determine whether or not a taxpayer will qualify for the MBB. One factor is whether or not a taxpayer was employed in a trade or business during the tax year. Another consideration is whether the taxpayer took part in a qualifying work-based education program. If so, the taxpayer may qualify for a higher education tax credit. For a new trade or business, it is helpful to contact a certified public accountant experienced in business-related education and deductions to discuss the options available to a business owner.
