You
can deduct education expenses that are "ordinary and necessary"
expenses that maintain or improve your skills in your CURRENT business. A
recent case (Singleton-Clarke
v. Commissioner) determined that the costs of seeking an MBA by a Registered
Nurse met those criteria. It distinguished from two other cases where the costs
were not deductible.
·
One was a case where the taxpayer had not established a trade or
business. After receiving an undergraduate degree, the taxpayer worked in the
summer, then enrolled in an MBA program.
·
In another, a West Point graduate who served in the US Army for
four years began an MBA degree when he separated. As the taxpayer never worked
in business, the Tax Court felt the MBA was to prepare him for a new trade or
business, making it non-deductible.
A
potential quick summary is that if you feel you meet the criteria of
maintaining or improving your skills in your present business, you may want to
deduct the costs. However, you should also consider that the IRS may challenge
them if your return is audited.
If
deductible and if you are an employee, they would be deductible as an employee
business expense which is an itemized deduction. Consequently, it must be to
your advantage to itemize to claim them. Even then, the deduction may be
limited. Miscellaneous itemized deductions are only available if you qualify to
itemize and only to the extent that they exceed 2% of your Adjusted Gross
Income. Turbotax explains the 2% rule at
this site.
They
are found under the deductions and credits tab for employment expenses.
An
interesting discussion of this issue that might help you is here.
