Tax in Action: Practical Strategies for Tax Pros

The Knowledge Economy Tax Trap: When Education Costs Aren't Deductible

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Jeremy breaks down the complex world of work-related education tax benefits, revealing why most educational expenses aren't as deductible as business owners think. He explains the stark difference between limited educational assistance programs that cap benefits at $5,250 annually and business expense deductions that often get rejected by the IRS for qualifying taxpayers for "new trades or businesses." Through real tax court cases involving everyone from IRS agents trying to deduct law school to nurses upgrading their licenses, this episode exposes the narrow window where education costs actually qualify as legitimate business deductions.

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  • (00:00) - Introduction: The Knowledge Economy
  • (01:00) - General Education Tax Benefits
  • (04:20) - Business Owner Education Questions
  • (05:20) - Two Main Approaches for Business Education Benefits
  • (08:20) - Educational Assistance Programs Deep Dive
  • (14:20) - Program Limitations and Restrictions
  • (23:55) - What Educational Assistance Programs Cover
  • (28:15) - Substantiation and Double Benefit Rules
  • (31:55) - Business Expense Deduction Alternative
  • (34:35) - Qualifying Education Expenses
  • (39:15) - Non-Deductible Education: Two Key Exceptions
  • (42:35) - Established in Trade or Business Requirement
  • (45:55) - Law Degrees and New Trade or Business
  • (49:35) - Professional Certifications as New Trade or Business
  • (51:15) - MBA Programs: Split Tax Court Decisions
  • (54:15) - Final Warnings and Best Practices

    • Connect with Jeremy
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    Tax in Action: Practical Strategies for Tax ProsBy Jeremy Wells, EA, CPA
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