are cpa fees tax deductible
January 27, 2010 at 6:06 pm #157152
This sounds pretty stupid since I passed REG, but are CPA fees and study material tax deductible? That would be nice since I know alot of us have spent a good amount of money on this test. ThanksJanuary 27, 2010 at 6:28 pm #227932
In order to be deductible under Publication 970, the study materials need to be work related and not qualify you for a new profession. CPA exam fees and study materials as well as fees associated with the bar exam are not deductible because getting your CPA license qualifies you for a new profession according to the IRS. CPA fees related to tax preparation are deductible subject to the 2% of AGI limitation.January 27, 2010 at 6:40 pm #227933
Thanks, so if you already have a job in accounting they are deductible?January 27, 2010 at 6:49 pm #227934
No they aren’t deductible at all. To be deductible, they have to be work-related expenses. I would look at Publication 970 from the IRS. It clearly lists CPA review classes and law materials as not being deductible.January 27, 2010 at 7:09 pm #227935
thats bogusJanuary 27, 2010 at 7:21 pm #227936January 27, 2010 at 7:42 pm #227937
The publication seems confusing to me. First they give examples of how people in a particular field can take classes that enhance their current skills and that makes the cost deductible. There is also an example of an accountant getting a law degree, which is not deductible because that qualifies the accountant for another trade or business.That all makes sense. THEN, as WICPAHOPEFUL mentioned, they specifically call out CPA and Bar review courses as not deductible. Now, why would a current accountant not be able to deduct those expenses when they already are in the accounting business? Is not qualifying you for a new trade or business. I can see for someone like me, who worked as a software engineer and is now changing careers, how this is qualifying me for a new trade or business. If IRS wants to specifically exclude CPA materials, they should just say so, not say that the materials are part of a program of study that can qualify you for a new profession.January 27, 2010 at 9:07 pm #227938
I would think/believe that the IRS takes the approach that accountants passing the CPA and lawyers passing the bar exam puts the candidate into a new profession since you are now entitled to a license and the ability to practice your profession on your own (start your own business).
I would think that AFTER passing the CPA, you should be able to deduct those fees. ie, a self employed CPA may be able to argue that the expenses incurred to obtain their masters degree in accounting or business, and those study materials would qualify for a tax deduction. You did this after passing the CPA, and can argue you need this for your current job.February 2, 2010 at 4:46 pm #227939
Eh just deduct them anyway. Odds are you won’t be audited.
*Disclaimer* Please do not attempt to deduct your CPA prep fees. This was merely meant as a joke. *Disclaimer*February 3, 2010 at 10:27 pm #227940
Keep in mind I haven’t taken or studied for REG yet, but I’m pretty sure you CAN deduct your expenses for CPA prep materials. The catch though is you can’t use them to prepare you for the CPA exam. This might seem like it makes no sense — and it doesn’t — but to give an example, if you were already a CPA and decided to order the Becker materials just to help you freshen up on you accounting skills, you could actually deduct those expenses. I think. Of course no one would ever do that so it doesn’t matter anyway : )February 9, 2010 at 8:50 pm #227941
Okay… are they deductible in this scenario??…..
My work REQUIRES that I take and pass the CPA. It’s an expectation.
Can I deduct the fees paid to sit for the exam on my Schedule A? (Not the study material… but the actual exam fees…)
I know that there are some people that work for my company that HAVE taken them on their tax return, but I just wanted to see what the general consensus was.
Thanks!!April 9, 2010 at 9:45 pm #227942
StudyGirl…. that makes too much sense… this IS the federal government we are talking about here…April 9, 2010 at 10:36 pm #227943
I deduct them as a business expense, but I’m doing so via a partnership. We both deduct all our fees/books, etc.April 10, 2010 at 11:38 am #227944
You cannot deduct the exam fees nor your expenses for the study materials.April 10, 2010 at 2:33 pm #227945
You guys aren’t trying hard enough if you really want to deduct them. Now I run my own Accounting/Finance business on the side of my regular gig, so it’s a little easier for me, but do one tax return, give someone some advice…do something. Fill out a Schedule C for a business, book it as a loss and move on.
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