If you’re a freelancer, sole-proprietor, or otherwise self-employed, then you probably have tax deductible education expenses. Whether it’s keeping up with the latest industry news, or learning a relevant skill for a new project, you may be able to deduct these expenses from your taxes.
However, navigating the IRS rules for which educational expenses count as tax deductions can be tricky. Let’s discuss.
According to the IRS, in order for your education expenses to count as a write-off, it might be to “maintain or improve your job skills.” In essence, that boils down to two requirements:
This first rule means you can’t write-off an educational expense for a field you’re looking to enter. For example, if you’re not a real estate agent yet then you can’t write-off a real estate agent exam prep course. Also, you can’t write off an accounting class if you’re a delivery driver. You can only deduct the education within the field you currently work.
This second rule is more straightforward. In order for an educational expense to count as a write-off, you need to tie it back to improving your freelancing skills. Not all skills are things you might put on a resume -- like Photoshop or Node.js -- you can also include soft skills, such as industry knowledge and public speaking.
Here we will go over some examples for which education expenses are tax deductible.
Let’s say you’re a freelance designer who typically works with small business clients to prepare their branding and marketing assets. You start learning web development on Coursera, in order to add website creation to your services. That’s considered work-related education!
Books, podcasts, and videos are a common way to stay up-to-date on your industry and best practices. If you also use your subscription for personal reading, then simply apply a percentage tax deduction.
If you’re in an industry that requires a license or a certification periodically renewed, then all fees related to the preparation for those renewals are tax-deductible. Just remember -- you have to work in that field currently. Costs associated with getting your real estate license initially can’t be written off. Here is a list of more write-offs for real estate agents.
A news subscription can be an effective way to stay up-to-date with policy and industry at large. If it helps you with client small-talk and ensures that you sound professional at meetings and conferences, it’s a write-off!
If you are working toward a part-time degree while freelancing, then you may be able to claim your tuition and other associated fees as continuing education expenses. For example, if you’re a freelance consultant getting an MBA on the side. Just remember -- you have to already be working as a freelancer in a related field in order to claim this benefit. Here is our guide to carrying losses forward for educational expenses.
If you do a lot of public speaking or even client development discussions, then an improv class can really help you loosen up and feel more comfortable in your freelancing.
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