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MBA Tuition can be tax-deductible - keep an eye on it!

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Re: MBA Tuition can be tax-deductible - keep an eye on it! [#permalink]

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New post 24 Jan 2011, 01:14
Guys... I am on H1B and my official title in my visa is Business Systems Analyst. I am planning to do a PT MBA. Do you think I would be eligible for the fees and expenses deduction?

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New post 24 Jan 2011, 05:15
Interesting discussion. So nink/rhyme/others can you please explain what is the situation when:

1) Part time MBA:
- Just to expand knowledge
- Directly enhancing skills at job

2) EMBA:
- I guess by definition directly enhancing skills at job?


When would tax deduction apply? Thanks
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New post 09 Mar 2011, 11:18
Hi All,

The information is very help so far, but i wondering if you guys could help with my situation.

I have a full time job at an engineering position in the technical marketing department. I am also pursuing my MBA part time. I have student loans and my employer reimburses for a small part of my tuition. I currently am pursuing the MBA to enhance my current management skills even though my position is not technically management. i do manage a 1-2 people though. is this enough to get the deduction? an MBA is definitely not required for this position.

Also, i plan to stay in my position or a similar role, but does that mean if i get offered a random job in the future after i graduate, i cant take it and run the risk of being penalized? I am talking about how the mba must enhance the current position.

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New post 10 Mar 2011, 13:09
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I was excited when I read the title ...=(
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New post 10 Mar 2011, 20:13
As has been discussed in several previous posts, most students will not qualify to deduct the entire cost of MBA tuition. The rules are very specific and particular to individual circumstances, so if you're planning to try deducting the full cost of tuition, you should really speak with a tax advisor.

Most people on this forum are not qualified to give individual tax advice, and those that are probably are smart enough not to do so based on forum postings.
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New post 16 Mar 2011, 17:09
This is a little off-topic, but I had a related question. If I go to a school outside the US, do I still qualify for the lifetime learning credit? If so, what forms and documents do I need to provide? Thanks!
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Generally, tuition and certain other fees are eligible for the tuition deduction or lifetime learning credit if they are paid to an "eligible educational institution". According to the IRS:

The IRS wrote:
An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.

Certain educational institutions located outside the United States also participate in the U.S. Department of Education's Federal Student Aid (FSA) programs.


So you should check with your school to see if it qualifies, and check out IRS publication 970 for all the fine print on the deduction and credit:

http://www.irs.gov/publications/p970/

And of course, the usual caveat that you should check with your tax professional (or TurboTax) to see how these apply to your specific situation.
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New post 18 Mar 2011, 02:10
I checked. HEC isn't an eligible school. :(
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New post 23 Mar 2011, 18:54
In a similar vein, relocation expenses can typically be written-off for a job that is expected to last beyond a certain duration. Given that summer internships are just for a summer, is there a way to write off relocation expenses for the summer internship? Would it increase the chance of an audit?

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New post 24 Mar 2011, 07:35
No, you have to work for something like 9 months after moving so a 12 week internship doesn't come close to qualifying.
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New post 23 Apr 2011, 12:00
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I'm starting to think that it is possible to deduct FT MBA Tuition.

These guys discuss it on their show (link should be live for you, otherwise sign up for the newsletter to get it - no affiliation to me) http://www.thembashow.com/newsletter/BonusContent.html
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New post 12 Aug 2011, 21:25
Thank You BB for starting this post....This was a gray area that I was really thinking about...

The link - http://www.nowackcpa.com/MBA-deduction.html is not active now....
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New post 12 Aug 2011, 22:20
For those not paying U.S. taxes, this will almost certainly not apply. Out here in Asia - at least in India and Hong Kong I can tell you getting a tax deduction for a degree earned outside your home country may be very hard to justify for a deduction. Do consult your friendly neighbourhood tax advisor but I am pretty sure you'll get no deduction here. The good news out here in Asia is, unlike the U.S. a lot of Asian countries base their taxation on a residency model as opposed to U.S. taxation based on citizenship on global income. So if you were not resident in a lot of Asian jurisdictions during a certain period on account of being elsewhere you may not get taxed anyway.

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New post 17 Jan 2012, 10:36
Currently, I am doing a part time program and working full time. I am taking part in a 3 year leadership development program with the feds, and as part of my program, they are training me to become a Level II program manager. The certification requirements are experience and training, but there is a desired level of education which is a graduate degree in business administration. Can I deduct my tuition?

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New post 17 Jan 2012, 10:48
aznboi986 wrote:
Currently, I am doing a part time program and working full time. I am taking part in a 3 year leadership development program with the feds, and as part of my program, they are training me to become a Level II program manager. The certification requirements are experience and training, but there is a desired level of education which is a graduate degree in business administration. Can I deduct my tuition?


If you're talking about deducting the full amount, then to my knowledge, your education must meet two requirements:

1) It must not be required as the minimum for your job.
AND
2) It cannot qualify you for a new trade or business.

Check out this link at irs.gov, and scroll down a little for a handy flowchart (Figure 27-A).

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New post 17 Jan 2012, 14:32
nink wrote:
Unfortunately, her win does not change anything.

Typical MBA students (especially FT students) can't deduct his/her tuition because in order to deduct the tuition,

1) it has to maintain or improve his or her skills for his/her current job.

2) education must be related to trade or business which the taxpayer is currently working in (therefore, career switchers will not be able to deduct his/her MBA tuition)

3) education can not be minimum requirement for the qualification of taxpayer's trade or business

FT students attend bschool full time. As a result, he/she can't successfully argue that he/she is actively involved in his/her trade or business, although one can argue that it is a "temporary leave of absence" from his/her current trade or business. However, IRS will take you to the court and the whole appeal process is long and difficult (and expensive).

Usually, PT MBA students (example: analyst on wall street pursuing finance MBA; accountant pursuing finance MBA or JD/LLM in Taxation, ops manager pursuing general management MBA etc etc) pursuing MBA in concentration that is related to his/her current trade or business (and enhance his/her skills) can deduct MBA tuition (not reimbursed by the employer) without hearing back from the IRS.

I have not practiced taxation in few years but I am pretty sure this still applies today. In the article, it wasn't crystal clear but I think the nurse somehow argued in a way that her MBA degree will allow her to perform better in her current occupation and the judge accepted her reasoning.

Nevertheless, IRS is one of the most dysfunctional government agency. Depending on who ends up handling your case, you might end up with a knowledgeable and reasonable IRS reps, or you might end up with a moron who does not even understand a thing. Fighting them through appeals/conferences/court hearing can be lengthy and expensive.



It is important to distinguish what this woman did vs what most students try to do. She claimed the whole tuition as a business expense (or so it seemed from the article). This is not to be confused with the Lifetime learning credit or the hope credit. These can be claimed by anyone (single file under 80 MAGI and 120 for joint) as long as you go to an accredited university.

Ps. how did Phoenix qualify as an accredited school? :-D
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New post 17 Jan 2012, 14:33
pemberly wrote:
This is a little off-topic, but I had a related question. If I go to a school outside the US, do I still qualify for the lifetime learning credit? If so, what forms and documents do I need to provide? Thanks!



As long as you file in the US you qualify.
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New post 21 Jan 2012, 01:12
Jerz wrote:
And, as rhyme points out, do you really want to piss off the IRS?


Does the IRS get pissed over a 50k deduction, resulting in maybe 12k less revenue? I genuinely don't know, just asking.

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New post 26 May 2012, 17:49
This deduction should always be valid for entrepreneurs who already have their business pre-MBA, who continue to run it during their FT MBA, and who continue with their business even after the MBA. But try explaining that to the IRS during an audit.

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Re: Bump for 2017 thoughts on if MBA Tuition can be tax-deductible [#permalink]

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New post 12 Oct 2017, 11:01
Bumb!

Anyone have any more recent thoughts on this? I know tax law is always changing.

I'm planning to do a part time MBA and would like to deduct the full cost if it is allowed.

Also I'm planning on staying in the same functional area after graduations, but what happens if I decide to change industry, say to consulting, after I have already graduated and deducted on the previous years taxes?

Thanks!
~Alex

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Re: Bump for 2017 thoughts on if MBA Tuition can be tax-deductible   [#permalink] 12 Oct 2017, 11:01

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