Tax Year Prior to 2020: Can you deduct real estate classes?

[DS30]

It depends.

If you are self-employed -

Yes, you would be able to claim any ordinary and necessary business expense that relate to your self-employment business (including classes related to your self-employment profession).

Please refer to this IRS link for more information about Business Expenses

To enter business income and expenses, once you have signed into your TurboTax Account (for TurboTax Online sign-in, click Here , then select "Take Me to My Return"), type "Schedule C" in the search bar then select "jump to Schedule C".

If you are an employee -

If you are not able to claim an education deduction because your education expenses do not qualify, the only other place that you might be able to claim some of these expenses would be as work-related expenses. (Otherwise, they would be considered personal expenses and you would not be able to claim them on your tax return.)

According to the IRS, for work-related education to be deductible, your expenses must be for education that (1) maintains or improves your job skills or (2) your employer or a law requires it to keep your salary, status, or job. However, even if the education meets either of these tests, the education cannot be part of a program that will qualify you for a new trade or business or that you need to meet the minimal educational requirements of your trade or business

If your education expenses could be considered job-related, then you would be able to claim a deduction as un-reimbursed job-related expenses. These are deductible miscellaneous expenses that are subject to a 2% AGI limitation and are only deductible if you itemize.

To enter your job-related expenses in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab
2. Next click on “Deductions and credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Employment Expenses”
5. Choose "show more", then Job-related expenses and follow the onscreen instructions

• Say "yes" to question "Did you have any of these expenses in 2016 for your W-2 income?" under the screen titled "Employment Expenses Related to a W-2".
• after about 6 to 10 question screens, you will get to a screen titled "Any Other Expenses" you can put this information here (see screenshot)

Please note: For an accreditation exam that is not required by your employer but is an initial exam, the IRS will not allow you to claim a miscellaneous deduction.

According to the IRS, when the expense involves Professional Accreditation Fees, you can't deduct professional accreditation fees such as the following: 

• Accounting certificate fees paid for the initial right to practice accounting.
• Bar exam fees and incidental expenses in securing initial admission to the bar.
• Medical and dental license fees paid to get initial licensing.  

For more information about what is allowed and what is not allowed as a miscellaneous deduction, please refer to the following link:

https://www.irs.gov/publications/p529/ar02.html#en_US_2015_publink100027031

[lambchops]

Can I deduct my continuing education required to keep my Real Estate license active in 2019?

[JohnW222]

You can only claim these expenses if you’re self-employed. 

PLEASE NOTE that the answer above, as it relates to employee business expenses, is now obsolete.  If you're an employee -- someone who receives a Form W-2 for their services -- you can no longer claim such a deduction.

Unfortunately, job-related expenses for employees are no longer deductible under the new law.  Please see the TurboTax Help article "Can employees deduct any job-related expenses?" for more information. 

However, if you're self-employed, see the TurboTax Help article "Where do I enter my self-employment business expenses, like home office, vehicle mileage, and suppli..." for guidance.

[lambchops]

I am full time employed with a company for my normal job BUT I have my Real Estate license in referral and must take continuing ed courses every 2 years to keep license active, does this count as self employed in that aspect?

[ColeenD3]

Merely having a license is not the same thing as having a business. You need to have income or at the very least an active profit motive.

The IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby, in which case you can't claim expenses to the extent of your hobby income.

To determine if your business is a hobby, the IRS looks at numerous factors, including the following:

·         Do you put in the necessary time and effort to turn a profit?

·         Have you made a profit in this activity in the past, or can you expect to make one in the future?

·         Do you have the necessary knowledge to succeed in this field?

·         Do you depend on income from this activity?

·         Are your losses beyond your control?

[lambchops]

I have never really made money (which is a shame because keeping the license active is expensive); although that is the purpose of referral..............to make income by referring people.

So it sounds like this is not deductible.

[VictorW9]

You have the option to consider taking the cost of your real estate classes as start-up costs or organizational expenses. There are some rules that you need to know before you can deduct those start-up costs.

• You can deduct a portion of the costs in the first year up to $5,000 but reduced by the amount the costs exceed $50,000. 
• Amortize the remaining costs (that is deduct them in equal installments) over a period of 180 months beginning with the month in which your business opens.