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

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.

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?

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.

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!

And, as rhyme points out, do you really want to piss off the IRS?