Deduction Possibility for Tax Return Preparer Courses
Tax consequences for educational expenditures normally consider only college costs. But continuing professional education for adults might also have tax implications.
Many individuals complete CPE courses that are required by their employers. In other cases, self-employed individuals incur work-related education costs. The key tax factor is whether the education is related to a taxpayer’s existing profession.
For example, a tax deduction is available for tax return preparer continuing education.
However, a person attending tax preparation school to train for initially entering the tax profession will experience an interesting new career but isn’t entitled to a tax deduction for the education costs.
Individuals already working in tax jobs can deduct the expense for tax return preparer courses. Most professionals in the tax field take courses annually to maintain knowledge and obtain tax law updates. Enrollment in online continuing education courses also counts as professional education. The new designation of Registered Tax Return Preparer that the IRS issues has annual RTRP CPE requirements effective in 2012.
Self-employed people – such as tax practitioners with their own businesses – deduct education costs on Schedule C. Employees must itemize deductions in order to receive a tax advantage for CPE classes. For example, the cost of tax CPE for an employee of a tax practice is a miscellaneous itemized deduction. It is therefore subject to the deductible limitation of having to exceed two percent of adjusted gross income.
In most cases, tax preparation companies will pay for tax preparer CPE and deduct the cost as a business expense. A tax return preparation business can also deduct its costs for training new employees. However, prospective employees cannot deduct their personally paid costs to qualify for entering the tax profession.
Tax-deductible education costs for an individual in any field must maintain or improve skills for a present job. In that case, seminars and course fees are tax deductions along with transportation and books.
Educational expenses incurred to meet minimum job requirements are not tax-deductible. These fit the same deduction limitation category as training to switch jobs. However, costs to attend classes at an institution of higher education are eligible for the Lifetime Learning Credit. So a tax benefit is still possible for someone looking to begin work in a tax return preparer career.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.