Put Education Expenses Where?

Publication 970 clearly states that I can deduct education expenses as part of being self-employed. Does this cost go on Schedule C as a business expense or Schedule A as a deduction? Thanks   

Reply to
Beej
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It depends :-). There are four places you can deduct education expenses for the average taxpayer and a fifth one for self-employed Sch. C filers.

  1. Hope credit
  2. Lifetime learning credit
  3. Tuition and fees deduction
  4. Schedule A, employee expenses subject to 2% of AGI
  5. Schedule C business expenses.

The first two are credits to your tax and are reported on a separate form, which carries to page 2 of the 1040. #3 is an adjustment to income on page 1 of the 1040. These all have restrictions, in regards to types of expenses deductible, types of institutions eligible, or type of student. #4 is restricted to work-related education, but the education can't qualify you for a new job, it must be related to what you are employed as now. If your education was related to your self-employment, it can be deducted as a business expense. I usually call it Continuing Education, listed under other expenses on page 2 of the Sch. C. This has the added advantage of reducing your SE tax, also.

Reply to
bono9763

"Beej" wrote

If the education expenses are qualified business expenses, they fall on Schedule C.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Reply to
Paul Thomas, CPA

IRS discontinued Publication 508, Tax Benefits for Work-Related Education, in 2003. I liked Pub. 508 because the rules therein clearly differentiated work-related education expenses from expenses routinely incurred by ordinary post-secondary education students. The rules for deducting work-related education expenses haven't changed so you can read about them in the 2002 edition of Pub. 508.

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Qualifying work-related education is explained on page 2 and there is a flow chart (Figure A) on page 3 you can use to determine if your education expenses qualify to be deducted on Schedule C. Frederick Lorca

Reply to
Frederick Lorca

No, not just any "education expense". Only for those courses which pertain to your schedule c type business. For example if I were still filing a schedule c, no way I could deduct a course in Greek art. So if you have several courses, deduct the business related ones on schedule c, and then go for the lifetime learning credit for others. ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

It depends on what the education is for. If its required to your business (the sch c), then it belongs there. If its unrelated to your business, you should look into the education credits & deductions. For example, if I take a course required to maintain my CPA license, I deduct it on schedule C. If I take college courses in any other field unrelated to my business, I would select the education credit or deduction which benefits me the most, based upon my tax calculations.

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Reply to
Benjamin Yazersky CPA

Well, maybe a way.

Suppose you were trying to get a Greek art museum as a client (or the chairman of it, for his personal stuff) and you took the course in order to be able to chat with him about stuff he's interested in? Seth

Reply to
Seth Breidbart

Nope. Doesn't meet the ordinary and necessary tests.

ChEAr$, Harlan

Reply to
Harlan Lunsford

Schmoozing (potential) clients isn't ordinary and necessary?

Seth

Reply to
Seth Breidbart

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