Real Estate Education Can Be Deducted on Tax Returns
Real Estate Education: This Might be a Deductible Expense
All of us would like to save the most money we can in taxes. It is much better to have more money in your pocket than less. Therefore, it is advantageous for the prudent taxpayer to take advantage of every legal tax credit, refund, and deduction that is available.
Through legislative grace, Congress has decided to give taxpayers a small break when it comes to deducting educational and business expenses. If you are a real estate employee in search of how to get the best tax refund 2015, you will want to take advantage of the tax deduction afforded to higher education expenses and business expenses. If you are just getting into real estate and are not already established in the profession, you will not be able to deduct the expense of a real estate courses as a business expense. This means that if you are studying to take the real estate exam and have not yet entered the profession, you cannot deduct the cost of studying, exam prep, or the cost of the exam itself as a business expense. The reason for this is that you cannot deduct educational costs as a business expense if that education qualifies you for a new trade or profession.
Educational Expense Deduction
However, you might be able to take advantage of the lifetime learning credit, which allows the taxpayer to take a credit against his adjusted gross income equal to 20 percent of the first $10,000 spent on secondary education. An example is where you spend $3,000 on valid educational expenses. You would be able to take credit amount of 20 percent of $3,000 (3,000*.2), which would equal a $600 credit. Note that if you make over a certain amount of income, you are ineligible for the credit. For married couples filing jointly, the credit is unavailable if your adjusted gross income exceeds $128,000. If filing single or head of household, the credit is unavailable if you make more than $64,000.
Valid Business Expense Deduction
If you are already a practicing real estate agent in the field, you are permitted to deduct the cost of real estate courses as a valid business expense. The costs of attending mandatory continuing education to preserve your professional real estate license are deductible as business expenses. The threshold test for whether education is a valid business expense, and therefore deductible, is whether the education supports or advances the skills required in the given business or trade, or the education is required by statute or regulation to remain in good professional standing. Even if the education in question satisfies one or both of these tests, there are further limitations. The education is a non-qualifying expense if it is necessary to fulfill the minimum educational prerequisites of the taxpayer’s present business or trade, or the education will equip the taxpayer for a new business or trade. Education required by statute or regulation is deductible as long as the education is essential for the taxpayer to retain his current job, salary, or status, and it contributes to a legitimate business purpose of the taxpayer’s employer.
Resources;
Real Estate Employees - Claiming Work-Related Expenses
How much of your 'property eduction' is actually tax deductible?
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