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education expense tax benefits

Two recent threads on this topic require some clarification. As mentioned, see Pub 970 "Tax Benefits for Education". Several replies correctly stated that the "Business Deduction for Work-Related Education" (ch. 12 of the pub) only applies to education to maintain or improve current job skills, not to begin a new type of work. However, neither the Tuition and Fees deduction (ch. 6) nor the Lifetime Learning credit (ch 3) carry this same restriction. They both apply to education taken to

*acquire* or improve job skills (emphasis added). However they apply only to expenses at a qualified educational institution (but you do not have to be a degree candidate). They also cannot include classes related to sports, hobbies, etc. Only one reply mentioned this, I found the others somewhat misleading by omitting this important distinction, which most likely applies to both OP's.

-Mark Bole

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Mark Bole
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Well, in my situation, I am taking some accounting classes because they will certainly help me maintain or improve my current job skills. As a self-employed contractor, they should be sch C business expenses, straight off the top. Then I'm taking additional accounting classes that don't seem to directly relate to my work, but, being offered at the local college, will qualify for the Tutition and Fees deduction. Now - my next point of confusion, Having finished these accounting classes, I can then sit for the CPA exam. Then, having passed it on my first try :), I still have 15 hours of college classes left to take in order to get the 150 hour requirement here. I may get inspired and take something work related. On the other hand, getting a pilots license from the local community college, or just taking something else fun also is possible. The point is, I NEED these classes to become a CPA. As such, since I need the classes, will there be a tax deduction available? Thanks,

Reply to
blaha

I don't understand -- are you saying you need classes in "pilots license from the local community college" to become a CPA? (Although that would explain a lot...) The Tuition and Fees deduction and the Lifetime Learning credit are based on the rules in the IRS pub referenced earlier, which generally (with exceptions) exclude sports, hobbies, and so on.

-Mark Bole

Reply to
Mark Bole

What I need is 150 semester hours of college credit. Any subject whatsoever; just 150 hours total.

30 hours to sit for the exam, but 150 hours of college credit, and a batchelors degree. If your a standard student, most of the schools have ways to get those additional hours as part of your underrgrad accounting curriculum. My school has a couple of extra classes they recommend, plus some video tapes for independant study. Usually it just takes one summer of study. But in my case, it's just getting another 15 credit hours. I've talked to other CPAs here, and it tends to be taking whatever sounds like fun; cooking classes, history, PE, whatever. I've thought getting a pilots license would be fun. Now - since the credit hours are required to become a CPA, taking any classes I want to, even non-accounting related, and totally business unrelated, what tax benefits are available to me?
Reply to
blaha

As answered previously: Tuition and Fees deduction or Lifetime Learning credit (but not both) if you meet all the other usual requirements. No business-related expense deduction available for you in this situation.

-Mark Bole

Reply to
Mark Bole

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