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
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17 years ago
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
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.
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.
"Beej" wrote
If the education expenses are qualified business expenses, they fall on Schedule C.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
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.
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$, Harlan Lunsford, EA n LA
It depends on what the education is for. If its required to your business (the sch c), then it belongs there. If its unrelated to your business, you should look into the education credits & deductions. For example, if I take a course required to maintain my CPA license, I deduct it on schedule C. If I take college courses in any other field unrelated to my business, I would select the education credit or deduction which benefits me the most, based upon my tax calculations.
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Well, maybe a way.
Suppose you were trying to get a Greek art museum as a client (or the chairman of it, for his personal stuff) and you took the course in order to be able to chat with him about stuff he's interested in? Seth
Nope. Doesn't meet the ordinary and necessary tests.
ChEAr$, Harlan
Schmoozing (potential) clients isn't ordinary and necessary?
Seth
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