Many adults consider themselves to be lifelong learners, yet fail to take advantage of tax savings when paying for continuing education. In some instances, employers pay for continuing education (CE), especially when employees must have "CE credits" to maintain their credentials. Workers who are older than 60 years of age may get free tuition to continue an education if they qualify. Some educational institutions or career schools offer scholarships to help defray continuing education costs. States may also have special programs to help senior workers get a bachelors or graduate degree.

Regardless of your educational goals, knowing how to finance your continuing education is important. If you haven't put money aside to take classes, know that continuing education costs are considered valid tax expenses. Whether you are an employee or self-employed individual, you can write off educational expenses when they are related to your current position. Self-employed persons may be allowed to deduct continuing education expenses, including transportation or mileage costs. Unfortunately, costs involved with taking classes needed to transition to a new career field are not tax deductible.

In this guide to continuing education and taxes:
Tax Deductible Costs
Transportation Expenses
Employer Sponsored Continuing Education
Deducting Continuing Education Costs
Student Loans And Financing CE Costs

  1. Tax Deductible Costs

    According to IRS, if your continuing education needs meet the requirements, you can deduct the cost of taking one or more courses. In order to qualify for the write-off, you must take the course to improve or maintain skills needed to perform your job, or because an employer or laws pertaining to your employment require that you take these classes. For instance, an attorney must take continuing education relating to his or her legal practice or a teacher must renew a certificate to remain employed.
  2. Transportation Expenses

    It may be possible for you to write off business-related travel costs, such as the costs of driving from your place of business or home to the continuing education courses. IRS provides two methods to deduct these transportation costs.

    Let's say you spend $2,000 to purchase gasoline and car maintenance each year. You calculate that about three percent of your driving costs relate to attending continuing education courses. You are allowed to deduct $60 on your taxes. Alternatively, you may use the annual per-mile rate. This per mile rate fluctuates and IRS publishes the current per-mile rate taxpayers may use. If continuing education requires an overnight stay, you may deduct lodging and up to 50 percent of meals taken on your personal tax return.

  3. Employer Sponsored Continuing Education

    When an employer reimburses your continuing education expenses, you are not allowed to deduct these costs on taxes. If the employer reimburses you for a portion of these expenses, you may deduct the remaining costs. If you pay for a class and cannot attend it because of vacation or leave time, you can't deduct the pro-rated expenses of taking a continuing education class.

  4. Deducting Continuing Education Costs

    Ask a financial adviser about deducting continuing education costs. Self-employed taxpayers may be able to deduct continuing education costs on Schedule C as a business expense. The costs of transportation to and from classes are lumped with other business travel expenses. Continuing education is a business expense, such as unreimbursed employee expenses or tax preparation costs.

  5. Student Loans And Financing Continuing Education

    More educational institutions and career colleges offer continuing education classes online. Online coursework is often preferred, because it's possible to attend class or submit homework from the comfort of your home office or anywhere there is an Internet connection. Continuing education may be mandatory in some professions. In others, taking continuing education classes can help you get ahead in the career field.

    Certification and/or credentials can improve your chances of landing a better-paying job or greater work-life balance. Federal student loans aren't usually available to finance your continuing education. You must be enrolled at least half-time at an educational institution with access to federal student aid. In some cases, private student loans may help some workers pay for the costs of financing continuing education credits.

  6. Conclusion

    Knowing how to finance your continuing education depends on several factors. If you are employed, ask the human resources department about whether the employer pays for continuing education costs. Ask the educational institution, college, or university about financial assistance. Scholarships or stipends or private student loans can help you to pay for continuing education costs.

    Of course, paying for continuing education courses out-of-pocket is also an option. If you have a financial adviser, ask them about deducting these expenses on your tax return. If not, you can get unlimited expert tax advice through chat by signing up with H&R Block Online Free Registration. This online tax service also guides you through the tax process, comes with maximum refund and 100% accuracy guarantees, and received high ratings from the team.

    But one thing is even more important that saving money on taxes, and that's understanding that the costs associated with gaining CE credits, certificates, or credentials can mean greater earning power.

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