How to Claim Professional Training Expenses on Taxes

Many professionals complete work-related training to keep their skills current and learn about the latest standards. However, not everyone realizes that many training expenses are tax-deductible. Employees and self-employed workers can find out how to claim professional training expenses on their taxes based on IRS regulations.?

Attending seminars, conferences and classes is something that most workers must do at some point in their careers. These are all essential opportunities to learn new skills and stay current with industry trends.

However, many employees and self-employed individuals don’t realize that these expenses are often tax-deductible. The Internal Revenue Service’s (IRS) requirements are strict, so workers must follow set guidelines if they want to save that money.?

Let’s look at which expenses are tax-deductible and how to claim those deductions next tax season.

Work-Related Training Defined

Work-related training is any process to gain new skills or knowledge that improves an employee’s position or performance. It could also include training that builds on previous expertise in a way that helps an employee become more efficient.?

Common training opportunities include:

• Learning about updates to legal or regulatory practices
• Learning how to use new technology for better work efficiency
• Learning professional interpersonal skills to assist in the workplace

Many workplaces require training based on worker knowledge or expertise in the field. As laws or industry standards change, some employees or self-employed workers may have to complete training to maintain awareness of these advancements.

What Are Deductible Training Expenses??

To qualify for a tax deduction, the expenses must be for either:

1. A required employer training
2. Training that maintains or improves skills

This includes training necessary for employees to keep their job, salary or status. It also incorporates training that covers changes in regulations or educational requirements for a position.

Employees can claim work-related training as miscellaneous, itemized deductions. Employees must claim the reimbursement they receive as income to deduct these expenses.?

Self-employed individuals can claim work-related training as a business expense.

Eligible deductions may include more than just the initial cost of a training course. Other training expenses that employees or self-employed workers might deduct include:

• Tuition fees
• Supplies
• Laboratory fees
• Books
• Research fees

Travel costs, such as fuel, hotels and airfare, are deductible if the training is temporary and lasts for less than 12 full months.

What Training Expenses Are Not Deductible??

Training that the law requires for minimum education in a trade, business or profession is not deductible. For instance, you cannot deduct the cost of courses that prepare you for a licensing exam to enter the plumbing profession.?

The training must cover information that exceeds basic requirements for entry into a field or position for a deduction.

Personal expenses are also not deductible. Additionally, travel costs that include both personal and work-related purposes automatically become non-deductible.

Does It Matter Who Pays for the Training?

Employees can’t write off the costs if an employer pays for the training expenses. Only self-paid training expenses are tax-deductible for employees.?

Many companies spend money on employee training to ensure their workers develop additional skills and become more efficient overall. Amy Miller, a senior technical recruiter, says, “BUT AMYYYYYYY.... companies should be willing to TRAIN! Yep. And lots DO. The simple reality is the concept of "HIRING FOR ATTITUDE" simply doesn't compute in many cases. You need to hone in on the companies where it DOES compute. Who wants to be set up for failure in a new role because the training resources are limited - if they exist at all? NOT ME!” Even if a company hires new employees based on personality and attitude, it should still work toward ensuring all employees have opportunities to reach the same levels of excellence.

Employers can pay up to $5,250 per employee for professional development per the IRS without counting it as income if the opportunity is available to every employee.?

Self-employed individuals cover the cost of their training. Therefore, all the eligible costs count toward a tax deduction.

Claiming the Deductible?

Employees deduct itemized training costs with the Schedule A form.?

Self-employed workers use the Schedule C form. The Schedule C-EZ or Schedule F forms are also available for self-employed workers depending on their tax status.?

State or local government officials, Armed Forces reservists and certain performing artists use the Schedule 1 form to report these expenses.?

Deductions reduce how much of a worker’s income is taxable. Workers should consult a qualified tax professional regarding questions or concerns with reporting these deductions.

To calculate this deduction, the worker must determine the dollar value of all costs (training and other work-related expenses) and ensure it is not bigger than 2% of the gross income.?

Next, add the 2% work-related training expense deductions together, and subtract 2% of the adjusted gross income. The deduction amount is this final total.

Key Takeaways

How to claim professional training expenses on taxes

• Work-related training exists in every industry and at every level of expertise.?
• Workers can deduct many expenses on their taxes for required training or training that maintains or improves their skills.
• The IRS has specific requirements regarding what does or does not qualify for deductions.
• Employees and self-employed workers can claim the deductible on specific tax forms.

(Reporting by NPD)