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

Question

A Maryland nurse accomplished two rare feats in her battle with the Internal Revenue Service: She defended herself against the agency's lawyers and won, and she got a ruling that could help tens of thousands of students deduct the cost of an M.B.A. degree on their taxes. The U.S. Tax Court handed Lori Singleton-Clarke her victory last month, saying the 47-year-old Bryantown, Md., woman had properly deducted nearly $15,000 in business school tuition. The Tax Court ruling should make it easier for many other professionals to deduct the expense of a Master in Business Administration degree. Full Article is in the Jan 9th WSJ: https://online.wsj.com/article/SB1000142 ... US_News_5# P.S. Unfortunately the article does not touch on more interesting subjects such as why a 47-year-old Nurse needs an MBA or why an online degree from University of Phoenix is called MBA :wink:

tryinghard · Answer

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?

mainhoon · Answer

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

w3elf · Answer

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.

babyif19 · Answer

I was excited when I read the title ...=(

Jerz · Answer

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.

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.

pemberly · Answer

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!

Jerz · Answer

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: 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: https://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.

pemberly · Answer

I checked. HEC isn't an eligible school.

Unirower · Answer

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?

Jerz · Answer

No, you have to work for something like 9 months after moving so a 12 week internship doesn't come close to qualifying.

jb88 · Answer

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) https://www.thembashow.com/newsletter/BonusContent.html

krishp84 · Answer

Thank You BB for starting this post....This was a gray area that I was really thinking about... The link - https://www.nowackcpa.com/MBA-deduction.html is not active now....

MBAji · Answer

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.

aznboi986 · Answer

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?

method · Answer

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).

wallstreetbarbie · Answer

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

wallstreetbarbie · Answer

As long as you file in the US you qualify.

sda · Answer

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

adamtn · Answer

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.

alextaylor116 · Answer

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

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

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