Tip 9 – Deduct education expenses

Money Saving Tips - 12 Days of money saving tips of Christmas 

deduct education expenses

The more you learn, the more you earn. Deduct education expenses.

Education is vital for every entrepreneur, no matter your age or experience level. It’s true that you’re never too old to go back to school, and there’s a good chance it could cost you next to nothing and provide valuable new skills.  There are many tax breaks attached to educational purposes.

To be eligible for a tax deduction, the IRS requires one of two things. The classes you take maintain/improve your job skills. Or the new knowledge is required by your employer or the law to keep your salary, status, or job.

So what falls under the umbrella of education expenses?

  • Tuition, books, supplies, lab fees, and similar items
  • Certain transportation and travel costs
  • Other educational expenses, such as the cost of research and typing

Unfortunately not all academic pursuits are deductible:

  • The education is needed to meet the minimum educational requirements of your present trade or business
  • The education is part of a program of study that will qualify you for a new trade or business

Here’s an example: Tom Lopez has a masters in computer science and has been  self-employed for the last 5 years. Tom typically designs mobile interfaces for children’s games so he regularly participates in training courses to stay current on design trends for young gamers. He spends approximately $2,300 every year on these courses. The best part is that all of these expenses are deductible because they improve Tom’s necessary job skills.

Not sure whether you can make deductions?

The IRS provides this questionnaire to determine eligibility. And if you think more school is just a waste of time, you’re probably in the minority since more and more people under 25 are returning to the classroom.

 

 


 

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