Today TaxMama hears from Joan in Los Angeles, who has a quick question. “I am a high school teacher. This year I spent a considerable amount of money to become certified to teach yoga in order to teach at my high school as well as at local yoga studios. I didn’t earn any income this year teaching yoga, as I just finished my training two weeks ago. Can I claim money spent on my teacher training as business expenses even if I have no profit to show?”
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Dear Joan,
That’s an interesting question.
You don’t say what you were teaching before this yoga program. And that could be important.
Why? Because being certified for a new career is generally not deductible as an employee business expense.
Let me give you an analogy that exists within IRS procedure. Suppose you have a degree in accounting. And you’re working in an accounting firm, doing tax returns and certified audits.
Now, you take a review course to study for the CPA exam. You pay for the exam. You pass. And you continue working for the same accounting firm, doing the exact same tax returns and audits.
For IRS purposes, getting your Certification as a CPA is a different career. It may look, to you, as if it’s the exact same career – but not to IRS. What does that tell you about your yoga training?
Now, even though you probably can’t deduct the yoga certification as an employee business expense, you can do something better. If your yoga school meets all of IRS’s standards as an educational institution, you can use the Lifetime Learning Credit or education expense deduction on page 1 of your Form 1040.
If your expenses are higher than the maximum allowances, you can try to use them as employee business expenses. But be prepared to lose them under audit – or to fight mightily to support
your position.
Clue – if you’re presently a history or English teacher – not a chance.
If you’re a phys ed teacher, perhaps.
Now, using this as a business expense for a new business? You may be able to pick up the costs as start-up costs, in the year your business first generates some income. So consider holding a class before the end of the year to help folks deal with holiday stresses. Read more about start-up costs and business expenses by searching TaxTwist.com and IRS Publication 334
https://www.irs.gov/publications/p334/index.html and my book, Small Business Taxes Made Easy https://www.taxmama.com/AskTaxMama/book/
Meditate on that.
And remember, you can find answers to all kinds of questions about education expenses and lots of other tax issues, free. Where? Where else? At TaxMama.com
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- Ask TaxMama :: Where taxes are fun and answers are free
- TaxTwist.com :: Where TaxQuips will be moving & You can add your comments
- IRS Publication 334 :: Business Income and Expenses
- TaxMama’s Book :: Small Business Taxes Made Easy
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