Message Font: Serif | Sans-Serif
No. of Recommendations: 0
<I can't tell whether or not we would qualify to deduct our [education] expenses under the definition of "maintaining and improving skills." Any suggestions? >

Some background that your question shows you know already (but others may not): Treasury Regulation 1.162-5 "Expenses for Education" (paraphrasing): Expenditures made by an individual for education that are NOT 1) expenses to acquire education required to meet the minimum educational requirements for qualification in the individual's trade or business, or 2) expenses to acquire education that is part of a program of study that will qualify the individual in a new trade or business, are deductible if 1) the education "maintains or improves skills required by the individual in his employment or other trade or business," or 2) the education is required by the individual's employer.

It looks like you and your wife can deduct the expenses incurred in getting your degrees (because the "maintains or improves skills" language is broad enough to encompass this situatiuon) unless the degree would qualify you for a new trade or business.

I don't think that either of the degrees qualify either of you for a new trade or business. Usually only degrees that are closely related to a trade or business (like an M.D. or J.D.) meet that requirement (where "usually" means "almost all the time but I don't want to commit to such a strong position").

An example given in the Reg: "C, while engaged in the private practice of psychiatry, undertakes a program of study and training at an accredited psychoanalytic institute which will lead to qualifying him to practice psychoanalysis. C's expenditures for such study and training are deductible because the study and training maintains or improves skills required by him in his trade or business and does not qualify him for a new trade or business." The situations of both you and your wife sound remarkably similar to our friend C.

Happy deducting!!

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.