Business write off?

[Zephyr]

What is the name of your state (only U.S. law)? WI

I own a business in WI, my business focus is helping families in the family court system. I recently went back to school to finish my BA. I am pursuing and Interdisciplinary Studies degree emphasizing the study of the relationship between families and family court (haven't yet refined to an a very smple "pat" statement).

Anyway, obviously the focus of my education will benfit my business. Can I claim the transportation, book costs, and internet on my taxes as a business expense? (Tuition is a non-issue)

If the school were right in my town I probably wouldn't even think of it, however, the very least I will be driving to a class is 1.5 hours....with gas prices being what they are, every little bit helps.

Thank you!

 

[TinkerBelleLuvr]

If the schooling is to get you the minimum needed to be qualified for that position, it will NOT be deductible.

For example, my job requires me to have a bachelor's degree. I am a few classes shy, so they hire me anyway. I would NOT be able to deduct those classes because I don't meet the qualification for that job.

So, my answer is, it depends.

 

[Zephyr]

If the schooling is to get you the minimum needed to be qualified for that position, it will NOT be deductible.

For example, my job requires me to have a bachelor's degree. I am a few classes shy, so they hire me anyway. I would NOT be able to deduct those classes because I don't meet the qualification for that job.

So, my answer is, it depends.

ahhhh.....I think.....I'm already in business...so it certainly wouldn't be a minimum requirement....however, it would provide more knowledge, possibly be able to widen my base of services etc....so in which way does that tip the scales?

 

[TinkerBelleLuvr]

http://www.irs.gov/faqs/faq3-2.html

Topic 513 - Educational Expenses

You may be able to deduct work–related educational expenses paid during the year as an itemized deduction on Form 1040, Schedule A (PDF). To be deductible, your expenses must be for education that maintains or improves your job performance or serves the purpose of your employer and is required by the employer or by law to keep your salary, status or job.

Although the education must relate to your present work, educational expenses incurred during temporary absence from your job may be deductible. However, after your temporary absence, you must return to the same kind of work. Usually, absence from work for one year or less is considered temporary.

If you are an employee, you generally must complete Form 2106 (PDF) or Form 2106-EZ (PDF). Educational expenses are deducted as miscellaneous itemized deductions on Form 1040 Schedule A; they are subject to the 2% of adjusted gross income limit. For more information on the 2% limit, refer to Publication 529 and /or Form 1040, Schedule A&B Instructions.

Self–employed individuals include educational expenses on Form 1040, Schedule C (PDF), Form 1040, Schedule C-EZ (PDF) or Form 1040, Schedule F (PDF).

Your employer may report the educational assistance payments on your Form W-2 (PDF) in the appropriate box under "other". Taxable reimbursements will be reported by your employer as income to you in the appropriate box of Form W–2.

For more information on educational expenses or Education Tax Credits, refer to Chapters 11 & 12 of Publication 970, Tax Benefits for Education.

http://www.irs.gov/taxtopics/tc513.html

Read thru publications listed above to see how it best qualifies for you.

 

[Zephyr]

Thank you Ginny!

 

[LdiJ]

I am going to add something here. The 2% floor is important.

Take last year's tax return and look at your adjusted gross income. Multiply that by 2%. You can only deduct expenses that are MORE than that 2%.

Example: Your AGI is 5k, 2% of 50K is 1000.00. If your educational expenses in excess of tuition are 1200.00, you are only going to get to deduct 200.00. If you are in the 25% marginal tax bracket, that's only a 50.00 tax savings.

 

[TinkerBelleLuvr]

Ldij, she's self-employed. So, she won't be filing a 2106.