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05 / 20 / 2015 by Greg Freyman, CPA in Personal Tax

Can I Deduct Educational Expenses For Work?

I’m employed by a large company and earn around $250,000 per year. In addition, I have about $100,000 in annual business income from consulting that is reported on Schedule C. I attend a college in Chicago, and it is a post-secondary educational facility. Can I claim the education costs on Schedule C, and the out-of-town travel costs associated with my education? I’m receiving mixed answers online for whether or not I can deduct educational expenses for work.

We don’t believe that the education and related transportation costs are deductible Schedule C expenses. In order for this to be deductible, you must be able to prove that the education meets the following criteria:

1) Maintains or improves skills you need in your trade or business, or
2) Is required by law or regulation for keeping you license to practice in your trade or profession.

Even if one of the requirements is met (i.e. being number 1 in this case), the deduction is not allowed if it is needed to meet the minimum educational requirements of your present trade or business or is part of a program of study that will qualify you for a new trade or business. Given that you are considered a full-time employee and that is their main source of income/business, the Tax Courts would likely rule that the educational expenses are for a new trade or business. We referenced Reg CFR 1.162-5 and IRS Publication 970 in reaching this conclusion.

Regarding the travel expenses, if the educational expenses are in fact deductible and the prior mentioned requirements are met, the round-trip transportation requirements from your NYC home to the school in Chicago may be deductible under the condition that the educational expenses are on a temporary basis (i.e. to last 1 year or less). If the educational course is not on a temporary basis, you may deduct one way travel of what it would have cost to travel from work to school, but not more.

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