Education, work, and business expenses

[violmoons]

Got a few questions on what I can deduct - some overlapping concerns.

• My wife attended school in 2023 to become a nail technician. Costs included tuition as well as study guides, exam fees, and materials for practicing - chemicals, tools, gels, things like that.
• She became licensed and started working in a salon as a W-2 employee for a few months, then she left and started at another salon as a 1099-NEC worker. In both places, she's had to purchase tools and supplies specifically for her job, and other items indirectly for her job but required for her career, to practice techniques and get experience necessary to do her job well.
• And she created an LLC as a first step to eventually opening her own studio or salon. She's doing the 1099 job as an individual, not related to the LLC.

I'm trying to figure out how to determine what if any of her costs are going to be deductible. She's not eligible for AOTC or LLC, so that's out. From what I've read, tuition deduction doesn't exist any longer. So I'd assume her supplies, exam fees, etc. would not be eligible for anything.

Apparently work-related expenses are generally no longer deductible either, so whatever she bought while working at the W-2 job I assume is out.

How about now when she's working as a 1099? It's not straight freelancing, but it's non-employee work. Would the work-related expenses for this job maybe qualify as a business expense?

Since she has the LLC and future plans for a brick and mortar business, I might be able to argue that some of these costs are in preparation for that, but since we're still very early in that planning, I don't think I could justify it if challenged on it.

Is any of this stuff an easy yes or easy no answer? Or is this the kind of thing I should just hand to a CPA and let them sort it all out? Hoping to save the money and stick with TurboTax.

[Bsch4477 · Accepted solution]

First check with the nail technician school to find out if it’s an eligible school for the Lifetime Learning Credit. You are correct that there are no deductions while working as an employee getting a W-2. But as long as she gets a 1099-NEC she is self employed whether associated with her LLC or not. As self employed she reports her income and business expenses on Sch C. 

[violmoons]

Yep, her nail school was not eligible - just a small local school that was good enough for the state licensing board, but doesn't meet the LLC requirements.

So it sounds like we just need to carefully identify the purchases directly related to the 1099 job and ignore the rest. Thank you very much for your help.