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Are educational expenses tax-deductible in 2023?
Are educational expenses tax-deductible in 2023?
The cost of education isn’t getting any cheaper. But sometimes investing in some form of education might be just the thing you need to boost your career. Maybe it’s a new certification, a workshop or a master's degree in your field.
The good news is that the IRS does allow certain educational expenses to be claimed as tax write-offs. Because let's face it, if there's one thing that can make the prospect of shelling out your hard-earned cash a little less painful, it's the promise of a sweet, sweet tax deduction.
For self-employed individuals, this deduction has to be for education that is relevant to their line of work and/or is mandated by the law to continue working in your industry. An easy way to find eligible deductions is to use a self-employment income tax calculator.
Key takeaways:
- Educational expenses are tax-deductible for self-employed individuals
- The expenses must be for education related to the current field of work or is government-mandated
Table of contents
What qualifies as an education expense?
The IRS has specific rules about claiming educational expenses on your tax return as a self-employed individual. For one, it has to be related to your current business. So, if you’re a freelance contractor attending a seminar on the latest regulations in your field, you can claim that as a deduction.
You can also deduct any required certifications or training you need to complete to continue working on your field. For example, if you're a licensed nurse and need to complete continuing education courses to renew your nursing license, you may be able to deduct the cost of those courses when you file your Form 1040 in April.
Any extra courses you take to improve or upgrade your current skill set can also be written off as a tax deduction. But navigating this rule can be challenging. If you’re a freelance graphic designer who takes a course on the newest illustration tool to help your design work, that qualifies as an educational expense tax deduction, and you can write it off.
But if you take a digital marketing course to better sell yourself to potential clients, that expense cannot be written off. This is because this course could also allow you to potentially move into another career path.
On a related note, the IRS does not allow you to deduct any educational expenses that could help you pivot into a new career, no matter how basic the course is. So, you can’t even write off an “Intro to Coding” class if you want to be a web developer.
Which education expenses are tax-deductible?
In addition to training classes and courses, there are other education-related expenses that you can claim as self-employment deductions. These expenses will lower your taxable income and as a result, your self-employment taxes.
This is especially useful if you have to pay quarterly estimated taxes. You can use a quarterly tax calculator to calculate your tax liability to see whether you owe more than $1,000. You will file this with Form 1040-ES.
Sometimes, these tax deadlines are forgotten or those payments you were banking on just didn’t come through in time. This could result in some tax penalties, in which case you can use a tax penalty calculator to figure out what you owe.
If you’re finding it difficult to track your deductions while working and studying at the same time, just link your expenses to FlyFin and let A.I. find every tax write-off you can claim. CPAs who are 1099 tax experts are available 24/7 in the app and can even prepare and file your returns for you so that you never have to worry about tax season again.
How can I claim education expenses on my taxes?
Now you know that continuing education is tax-deductible as long as it is for your current field of work. So, when you’re claiming this tax deduction, you can report it on Schedule C, as it qualifies as a regular business expense.
Apart from tax deductions, you can also claim certain education-related tax credits. These tax credits could be useful if your education expenses don't qualify for any other tax break. The Lifetime Learning Credit or the American Opportunity Credit are popular tax credit options to look into.
So if you think investing in your education is going to help your professional development, by all means go for it. Taking education expenses as tax deductions can be confusing to navigate as a self-employed individual, so make sure you consult a tax professional if you need advice on dealing with your unique tax situation.
What’s FlyFin?
FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. It offers a host of cutting-edge tax tools that help you quickly find deductions. You can also use tools like a home office deduction calculator.
FlyFin uses an A.I. to track all your business expenses automatically and find every possible tax deduction.
Once you have all your possible deductions in one place, our CPA team files a guaranteed 100% accurate tax return for you. It saves you a couple of thousand dollars and a ton of time on your taxes.
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