[Anonymous]

Hi Everyone,

It might be a silly question to ask, but I am not a tax person myself. I would like to ask for advice on the preparing my own tax return this year. Since I am paying my CPA study expenses on my own, is it possible to deduct those expenses somewhere on the Form 1040 for professional development or continuing education expenses? Any advice appreciated.

A broke CPA Candidate.

[Anonymous]

Just feeling a little bit goofy and creative here. Maybe we should treat the CPA study related expenses as a “hobby” like “fun” and “personal enrichment,” then we might be able to dedcut the expenses, right?

Here is the IRS publication defines “hobby”:

https://www.irs.gov/newsroom/article/0,,id=169490,00.html

“In order to make this determination, taxpayers should consider the following factors:

Does the time and effort put into the activity indicate an intention to make a profit? => Yes

Does the taxpayer depend on income from the activity? => Yes

If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business? => Yes

Has the taxpayer changed methods of operation to improve profitability? => Yes

Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business? => Yes

Has the taxpayer made a profit in similar activities in the past? => Hopefully

Does the activity make a profit in some years? => Planning to

Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity? => Yes

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year”

[Anonymous]

My organization pays for CPA certification — review course and test fees (only once, of course), which is wonderful.

But being a dutiful CPA candidate, I wondered if I needed to declare the amounts paid for me as income. So I called the IRS. They started me off with the regular 1040 people, but eventually I was transferred to an expert. We read the code on qualified tuition assistance programs together over the phone and determined that the CPA expense was covered and did not need to be declared as income. Of course I made a contemporaneous record of the call and it is in my tax file.

[Anonymous]

My organization pays for CPA certification — review course and test fees (only once, of course), which is wonderful.

But being a dutiful CPA candidate, I wondered if I needed to declare the amounts paid for me as income. So I called the IRS. They started me off with the regular 1040 people, but eventually I was transferred to an expert. We read the code on qualified tuition assistance programs together over the phone and determined that the CPA expense was covered and did not need to be declared as income. Of course I made a contemporaneous record of the call and it is in my tax file.

[Anonymous]

There is an interesting court case of an IRS attorney who was trying to deduct law school and bar review that went to the Ninth Circuit Court of Appeals (Go big if you go at all, I guess).

https://law.justia.com/cases/federal/appellate-courts/F2/591/1273/369226/

“We agree with the Tax Court that Sharon's college, law school, and New York bar review expenses were personal expenditures directed toward his minimum educational requirements, and therefore nondeductible.”

and, further

“The Tax Court held that he could not amortize the costs of his California bar review course because it was incurred in pursuit of ‘a new trade or business.'”

(I did quite a bit of research on this as we were figuring out if paying bar review costs for our new attorneys was compensation or not.)

[Anonymous]

There is an interesting court case of an IRS attorney who was trying to deduct law school and bar review that went to the Ninth Circuit Court of Appeals (Go big if you go at all, I guess).

https://law.justia.com/cases/federal/appellate-courts/F2/591/1273/369226/

“We agree with the Tax Court that Sharon's college, law school, and New York bar review expenses were personal expenditures directed toward his minimum educational requirements, and therefore nondeductible.”

and, further

“The Tax Court held that he could not amortize the costs of his California bar review course because it was incurred in pursuit of ‘a new trade or business.'”

(I did quite a bit of research on this as we were figuring out if paying bar review costs for our new attorneys was compensation or not.)

[whatkey]

@CPA Genie

“Does the time and effort put into the activity indicate an intention to make a profit? => Yes”

The time and effort put into the activity is intended to pass the CPA exam. Which may result in a profit, but profit is not the primary intention. Sucks for us, but I think the IRS is pretty strict specifically on CPA related expenses.

Using Becker, Ninja Notes, and CpaReviewForFree

FAR - 87 (2/17)
REG - 89 (4/21)
AUD - 89 (5/31)
BEC - 89 (7/11)

[whatkey]

@CPA Genie

“Does the time and effort put into the activity indicate an intention to make a profit? => Yes”

The time and effort put into the activity is intended to pass the CPA exam. Which may result in a profit, but profit is not the primary intention. Sucks for us, but I think the IRS is pretty strict specifically on CPA related expenses.

Using Becker, Ninja Notes, and CpaReviewForFree

FAR - 87 (2/17)
REG - 89 (4/21)
AUD - 89 (5/31)
BEC - 89 (7/11)

[Anonymous]

If you're paying for some sort of education/testing, you have to hit the sweet spot of of maintaining your knowledge/skills for your current business or job.

It can't be part of minimum qualifications for a job or profession. nor qualifications for a new job or profession. That's why you see interpretations that CPA review isn't deductible as a business expense, and why CPE courses after you get your CPA are. (And don't forget the 50% meal deduction if you're at a CPE and have to buy lunch.)

[Anonymous]

If you're paying for some sort of education/testing, you have to hit the sweet spot of of maintaining your knowledge/skills for your current business or job.

It can't be part of minimum qualifications for a job or profession. nor qualifications for a new job or profession. That's why you see interpretations that CPA review isn't deductible as a business expense, and why CPE courses after you get your CPA are. (And don't forget the 50% meal deduction if you're at a CPE and have to buy lunch.)

[Anonymous]

IRS Publication 529

“Work-Related Education

You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets

at least one of the following two tests. 1.It maintains or improves skills required in your present work. 2.It is required by your employer to keep your salary, status, or job, and the requirement.”

“Professional Accreditation Fees

You cannot deduct professional accreditation fees such as

1. Accounting certificate fees paid for the initial right to practice accounting.

2. Bar exam fees and incidental expenses in securing your initial admission to the bar.”

But I think you can still deduct renewal fees, CPE, and professional association fees. Renewal fees as:

“Licenses and Regulatory Fees

You can deduct the amount you pay each year to state or for licenses and regulatory fees for your trade, business, or profession.”

and deduct CPE as work related education required to maintain your job (assuming your employer requires that you have an active CPA license, and doesnt already pay for your CPE).

“Dues to Chambers of Commerce and Professional Societies

You may be able to deduct dues paid to professional

firm. You occasionally take work home at night rather than organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties

of your job. Similar organizations include:

· Boards of trade

· Business leagues,

· Civic or public service organizations,

· Real estate boards, and

· Trade associations.”

By the way, business suits are deductible as a work uniform 😉

[Anonymous]

IRS Publication 529

“Work-Related Education

You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets

at least one of the following two tests. 1.It maintains or improves skills required in your present work. 2.It is required by your employer to keep your salary, status, or job, and the requirement.”

“Professional Accreditation Fees

You cannot deduct professional accreditation fees such as

1. Accounting certificate fees paid for the initial right to practice accounting.

2. Bar exam fees and incidental expenses in securing your initial admission to the bar.”

But I think you can still deduct renewal fees, CPE, and professional association fees. Renewal fees as:

“Licenses and Regulatory Fees

You can deduct the amount you pay each year to state or for licenses and regulatory fees for your trade, business, or profession.”

and deduct CPE as work related education required to maintain your job (assuming your employer requires that you have an active CPA license, and doesnt already pay for your CPE).

“Dues to Chambers of Commerce and Professional Societies

You may be able to deduct dues paid to professional

firm. You occasionally take work home at night rather than organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties

of your job. Similar organizations include:

· Boards of trade

· Business leagues,

· Civic or public service organizations,

· Real estate boards, and

· Trade associations.”

By the way, business suits are deductible as a work uniform 😉

[kmwgrace]

Since I'm taking Becker for credit at my university as part of my MTX and the Becker materials were required for the class I plan to deduct the cost for them as educational expenses next year.

~ Kate... MTX!
CPA exam on hold while I homeschool my 6 year old!

[kmwgrace]

Since I'm taking Becker for credit at my university as part of my MTX and the Becker materials were required for the class I plan to deduct the cost for them as educational expenses next year.

~ Kate... MTX!
CPA exam on hold while I homeschool my 6 year old!

[jeff]

“By the way, business suits are deductible as a work uniform 😉 “

Pretty sure you're wrong 🙂

[jeff]

“By the way, business suits are deductible as a work uniform 😉 “

Pretty sure you're wrong 🙂

[Author]

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