Often businesses are not so aware about certain expenditures that can be expensed. This causes them to lose deductibles which can be treated as cash savings. It is important for business owners to know that training in the form of courses or classes that are crucial, both for the employer and employees can be deducted as an expense. You can entirely deduct the cost of educational classes if those add to your expertise in your current line of work. Hence, if you are an entrepreneur anything adding on to your qualifications as a business owner and helping you further your knowledge and business will qualify. The same applies to an employee. Normally the following can be deducted:
- Seminars or workshops in the relevant field
- Webinars in the relevant field
- Classes that enhance your current skills
- Subscriptions to periodicals and books in your line of business
- Transportation to your classes if they are local
- Courses that are crucial to upgrade your qualifications as required for retaining your employment status.
Examples of the above can be finance courses for bookkeepers or seminars to improve communication skills for salespeople etc.
You will find that the IRS does offer you a bit of leeway in its application of what is “required” for your job. So, sometimes minor allied courses can also be claimed as deductible. Yet, it is best to check with your accountant before you start a specific course whether the expenses entailed will be deductible. Do remember that a qualification that will enable you to embark upon a new career or a completely different line of work will not be allowed to be deducted no matter how much it furthers your career options. It must also be kept in mind that you may in all likelihood not use the qualification to seek another career, yet, if it does not seem directly relevant to the current work, it will not be allowed as a deductible. More than your intent, it is the direct purpose of the qualification that matters here.
MBA degrees are often not allowed though many have tried in the past. Again the same reason of enhancement of career options disqualifies it. Ensure that when you are offering educational assistance to your employees, you claim these as fringe benefits. Of course, it is a given that you will obviously offer skill updation for your employees in the area of your current business.
Keeping all these in mind, ensure that you maintain proper records and report your expenses appropriately and in time. Remember to keep track of all related expenses such as travel and transport costs as well. Stay informed and ensure that you save every dollar that you can, on legitimate deductibles.