Question

Sheila is a management consultant who has net earnings from self-employment of $90,000 in the current year. She has a BBA in business and has ten years of experience in various management positions. She has just completed her first year towards an MBA degree. She paid a total of $30,000 in tuition and fees. She would like to know if she may deduct this education as a business expense against her self-employment earnings. Please explain to her why the expense is or is not deductible.

Answer 1

According to the above example, Any Education expenses that you want to deduct must be related to improving your skills for your existing business but you cannot deduct it if you are preparing for a new line of work.

In this case, Sheila can deduct the education as a business expenses against her self employment earnings. She completed MBA degree to gain more knowledge for her business . She can deduct the tution fee expenses ( $ 30,000 ) towards her Self employment Income ( $ 90,000).