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Are CPA exam fees tax deductible?

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Re: tax deduction for education...

Re: tax deduction for education expenses - cpa exam fees and cpa review course fee.

I had W2 job as an accountant in the year in question. I also did a little bit of accounting/tax work on the side. To grow my business on the side, I invested in the CPA license. I spent approximately $2,800 in the Becker review course and each section of the CPA test was about $200 and I had to take sections more than once.

I have approximately $4,000 expense. It appears I can't deduct this as employment expense in "job related expense" section BUT how about deducting it as expense in business section of turbo tax?

So I'll have a little of accounting income $700 as side business and also plug in my expense of the CPA review/test fee as part of business expense.

This sounds fair doesn't it? This will cause my business to have net loss but many businesses have net losses and it'll save me tax money too.

Submitted: 6 years ago.Category: Tax
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Answered in 1 hour by:
11/9/2011
Tax Professional: Lev, Tax Advisor replied 6 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,722
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Hi and welcome to JustAnswer!

Please see for reference IRS publication 970 - www.irs.gov/pub/irs-pdf/p970.pdf - page 67 - Bar or CPA Review Course

Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. They are part of a program of study that can qualify you for a new profession.

Rules for deducting educational expenses - either as an employee or as a self-employed - are same - as set for qualifying work-related education - See page 61

This chapter discusses work-related education expenses that you may be able to deduct as business expenses. To claim such a deduction, you must:

--Be working,

--Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee,

--File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and

--Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education

In case of audit - the risk is very high that these deductions will be disallowed.

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Customer reply replied 6 years ago

If cpa/bar review course fees are treated the same for w2 employee or self employed then I guess I can't take the deducation. Seem funny the IRS points out bar and cpa expenses. I wonder if other professional deduct there expenses...

Well you answered my question I WILL NOT be deducting my cpa exam fee/review course for either education expenses for employee or business section. thanks.

Tax Professional: Lev, Tax Advisor replied 6 years ago

I guess that the IRS specifically addresses these items because of number of questions they are receiving related to CPA and Bar courses and relatively high costs.

That is correct - work-related education expenses- are those which maintain or improve skills needed in your present work - regardless if you are an employee or self-employed.

Lev
Lev, Tax Advisor
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