Education Expense Research Lauren Smith From: Tax

Education Expense Research Lauren Smith From: Tax Accountant, CPA Education Expenses claimed as Business Expenses Facts You incurred $15,000 in education expenses during the tax year in the course of earning an MBA from a local university. You want to deduct these expenses on your personal tax return as an employee business expense because your employer does not have an education expense reimbursement program.

The issue is (1) whether the education expenses qualify as education expenses and (2) whether they qualify to be deducted as a business expense on your tax return for this year. Rule The MBA is not a prerequisite if the petitioner was hired with the skills of clinical or risk management experience; credentials the petitioner already possessed. The MBA may have improved petitioner's skills set, but objectively, petitioner was performing the tasks and activities of the trade or business before commencing the MBA. Singleton-Clarke v. Commissioner, T.C. Summ. Op. 2009-182 (2009).

Publication 970 explains what conditions education expenses qualify as business expense. Analysis Court rulings have widely differed from case to case concerning the deductibility of education expenses as business employee expenses, particularly where the MBA is concerned. Daniel R. Allemier v. Comm'r (TC Memo 2005-207) allowed. Galligan (TC Memo 2002-150) denied. McEuen (TC Memo 2004-107) denied. Sherman (TC Memo 1977-301) allowed. Schneider (TC Memo 1983-753) denied. Glenn v. Comm'r (Dec 32, 613) 62 T.C. 270.275 (1974) denied.

The primary emphasis in these court rulings has been whether the education is required by the employer and whether the education qualified the petitioner for a new trade or business. The case of Allemier v.

Comm'r (TC Memo 2005-207) was allowed based on the facts that Allemier was employed in the same business, employer, before, during, and after obtaining the MBA, the MBA was not a job requirement for the initial position or for subsequent promotions, the job requirements before and after the MBA were not substantially different, and the MBA was not a requirement for a professional certification or licensure.

Publication 970 explains that you can deduct work related education expenses as business expense if: 1) The education is required by the employer or 2) the education maintains or improves skills needed in your present task. However, even if it meets one or both conditions, it does not qualify if: 1) it is needed to meet the minimum educational requirements of your present trade or 2) is part of a program of study that will qualify you for a new trade or business. Singleton-Clarke v. Commissioner, T.C. Summ. Op.

2009-182 (2009) is a very similar case to yours. She is an RN with over 20 years of experience who worked in various capacities, including quality control coordinator. Her case was denied as above. Even though the MBA did not qualify the petitioner for a new skill or trade and did improve the skill set, the.