Deducting Job-Related Educational Expenses
Shameless plug: TypeWell is co-hosting a webinar with a Certified Public Accountant from Independent Contractor Tax Advisors on Wednesday, April 22, 2015, Tax Strategies for Independent Contractors (free webinar)
Sometimes the answer to a question we receive from a transcriber can benefit others as well, so we’re sharing this one with you.
Q: Can any of the courses taken through TypeWell's LEO (Learning & Enrichment Online) be deducted on my taxes?
A: Yes, you can deduct the cost of continuing education courses — whether taken through TypeWell or elsewhere — with just a few stipulations.
According to the IRS: “If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. An itemized deduction reduces the amount of your income subject to tax.”
And the IRS also advises those of us who are independent contractors: “If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. This reduces the amount of your income subject to both income tax and self-employment tax.”
All the specifics from the IRS are found in Publication 970, “Tax Benefits for Education”: www.irs.gov/pub/irs-pdf/p970.pdf
A Houston Chronicle article online adds this detail: educational workshops, classes, and seminars must allow individuals to develop job-related skills.
"The training cannot be deducted if it’s required to meet the minimum requirements for a job, or if it leads to a new role."
Here's another way to put it: If you're taking the class to keep or improve your job skills, it's deductible. If you're taking the class in order to learn the skills to gain entry into a new-to-you profession, it's not deductible. So, the TypeWell Basic Skills Course — which is the minimum required training to become a transcriber — would not qualify, but any continuing education courses offered through TypeWell would be deductible. This includes the Turbo Courselet, LEO Classes, and other workshops or conferences.
One day you may find yourself on the road attending educational events, such as the the half-day workshop for transcribers coming up on May 8, 2015, sponsored by the University of Central Arkansas and Quality Transcription Specialists. Not only can you deduct the direct costs such as the registration fee, but you can also deduct some travel expenses. Other expenses you can write off include tuition, books, lab fees, and if applicable, research and typing costs. You cannot, however, deduct the cost of lodging.
So by all means, take classes, and save some money on your taxes, too!
Which continuing education classes will you be taking this year?
View the LEO Schedule here.