How to deduct tuition for MPH degree

[I Find This Humerus]

Hello,

 

I am a W-2 employee with a side per diem job (1099) both in the same field of medicine. I'd like to take classes to pursue an MPH which would help me with both jobs.

 

I get 5k CME money from my W-2 job. I think my best plan would be to spend my 5k CME money towards my yearly tuition (full reimbursement) and use the remaining cost of tuition as a tax deduction from my 1099 job? I know there is a standard 4k tuition tax deduction yearly for everyone correct?

Is this feasible?

[jfoxcpacfp]

There are 2 ways to deduct your tuition in this case:

1. The Tuition and Fees deduction - this is a deduction of up to $4k/yr taken as an adjustment to income ("above the line") on page 1 of your 1040. Use Form 8917 to report. There is no income limitation for taking this deduction but you cannot deduct use it as a deduction against your earned income.


2. As qualifying work-related education expenses - According to IRS Publication 970, you can write off qualifying work-related education expenses if:
   
   
   
   • You are established in a trade or profession prior to starting your education
   
   
   • Your education maintains or improves the skills you had prior to the education
   
   
   • You continue to use these improved skills after your education
   
   
   
   What this means is the IRS is looking for a thread of continuity in your job skills pre-MPH, as you pay for school, and then post-grad. A final requirement is that the education can’t qualify you for a new trade or business.
   
   Because your MPH degree would not qualify you for a new profession (e.g. like an MBA might), this requirement is typically not a problem. You may be able to deduct this against your IC income, but that really depends upon facts and circumstances. Definitely need to discuss with your CPA, who is more familiar with the totality of your situation.

[I Find This Humerus]

What do you mean by this, " but you cannot deduct use it as a deduction against your earned income."?

[jfoxcpacfp]

I Find This Humerus wrote:

What do you mean by this, ” but you cannot deduct use it as a deduction against your earned income.”?

Click to expand...

Sorry for the confusion. You cannot take the Tuition and Fees deduction on schedule C.

[I Find This Humerus]

jfoxcpacfp wrote:

I Find This Humerus wrote:

What do you mean by this, ” but you cannot deduct use it as a deduction against your earned income.”?

Click to expand…

Sorry for the confusion. You cannot take the Tuition and Fees deduction on schedule C.

Click to expand...

I have a piggyback question:

 

While I have already signed the contract for my IC job, I have not yet begun working as I am awaiting one last credentialing. However, I had to buy a new desk, chair, etc. for my new home office that will be used solely for this IC job.

 

Am I able to deduct these as business expenses even though I have not yet begun working (i.e. I bought them before making any money yet but have already signed my contract). I do plan on starting working before the year is over.

 

How much time pre-working is acceptable? Or is it simply from the day I signed contract onwards that counts?

 

Thank you.

[jfoxcpacfp]

I Find This Humerus wrote:

jfoxcpacfp wrote:

I Find This Humerus wrote:

What do you mean by this, ” but you cannot deduct use it as a deduction against your earned income.”?

Click to expand…

Sorry for the confusion. You cannot take the Tuition and Fees deduction on schedule C.

Click to expand…

I have a piggyback question:

 

While I have already signed the contract for my IC job, I have not yet begun working as I am awaiting one last credentialing. However, I had to buy a new desk, chair, etc. for my new home office that will be used solely for this IC job.

 

Am I able to deduct these as business expenses even though I have not yet begun working (i.e. I bought them before making any money yet but have already signed my contract). I do plan on starting working before the year is over.

 

How much time pre-working is acceptable? Or is it simply from the day I signed contract onwards that counts?

 

Thank you.

Click to expand...

Yes, you can depreciate these expenses in the year that they are placed into service for your new business. Since you plan to begin working before the eoy, you will qualify for the section 179 deduction in 2018. Section 179 allows you to deduct up to 100% of up to $1M of purchases in 2018 (as long as you don’t spend >$2.5M in total   )

[I Find This Humerus]

jfoxcpacfp wrote:

I Find This Humerus wrote:

jfoxcpacfp wrote:

I Find This Humerus wrote:

What do you mean by this, ” but you cannot deduct use it as a deduction against your earned income.”?

Click to expand…

Sorry for the confusion. You cannot take the Tuition and Fees deduction on schedule C.

Click to expand…

I have a piggyback question:

 

While I have already signed the contract for my IC job, I have not yet begun working as I am awaiting one last credentialing. However, I had to buy a new desk, chair, etc. for my new home office that will be used solely for this IC job.

 

Am I able to deduct these as business expenses even though I have not yet begun working (i.e. I bought them before making any money yet but have already signed my contract). I do plan on starting working before the year is over.

 

How much time pre-working is acceptable? Or is it simply from the day I signed contract onwards that counts?

 

Thank you.

Click to expand…

Yes, you can depreciate these expenses in the year that they are placed into service for your new business. Since you plan to begin working before the eoy, you will qualify for the section 179 deduction in 2018. Section 179 allows you to deduct up to 100% of up to $1M of purchases in 2018 (as long as you don’t spend >$2.5M in total   )

Click to expand...

Oh so it doesn't matter when I bought them or when I started working, just when I started using them solely for business?

 

Worst case scenario if I start working in 2019 I can still deduct even though they were bought in 2018?

[jfoxcpacfp]

Yes, that is correct.