John M. Hoffman & Associates CPAs

Frequently Asked Tax Questions

Education as a business expense.

As always, if your employer is willing to pay for your education as a tax free fringe benefit, we prefer that. There is an annual limit of $5,250 per employee of such tax free assistance. This is not to be confused with your employer agreeing to pay for your education costs as “trade or business” expenses that are for improving your skills within your existing role as an employee.

Self employed individuals may have the opportunity to deduct certain education costs as a normal “trade or business” expense. Examples of this would be a physician who attends mandatory continuing medical education classes, a CPA who goes to an annual income tax planning seminar, or an attorney who takes a refresher course on ethics.

In order to be deductible as a trade or business expense, the education expense can not be a requirement of attaining minimum education requirements to qualify for a given career (a bar exam review course for a lawyer for example). If a tax accountant attends medical school because she wants to become a doctor, that is not tax deductible as a trade or business expense. However, it that same CPA instead enrolled in a Masters of Taxation program, that would be tax deductible as a trade or business expense. Keep in mind that the education expense should not be designed to prepare you for a new career but instead refinement or enhancement within the existing career.