Tuesday, January 12, 2010

Deduct Law School Tuition in Taxes?

Okay... rare double header here.  Usually, I take a bit of a breather between postings--but I couldn't wait on this article.
Basically, Nurse deducts student loans for MBA on annual tax return. She is called out by the IRS. She challenges the IRS, sans attorney, and WINS!

I don't do tax. But, something tells me that his little decision, although not binding on the courts, can be considered persuasive in deducting law school tuition and/or loans as a business expense or something.  I don't know.   Any thoughts????


  1. lawyers are being phased out

  2. Tax attorney here.

    You can't deduct law school tuition from your gross income (and it is NOT A TAX CREDIT) in connection with the JD degree. This is because you are considered to have learned a new trade or skill upon completion of law school (in this case being an attorney) which disqualifies you from taking the deduction.

    On the other hand, if you are self employed, you may be able to deduct your LLM tuition. But LLMs are a huge waste of time (especially the oversaturated Tax LLM) and probably not worth it.

  3. LLMs are a separate scam run by the law schools. Does having an LLM really make one stand out? I suppose it could make one stand out as a fool who spent one extra year and tons of money on more "legal education."

  4. But isn't an MBA a new trade for an R.N.???

  5. You can deduct interest that you pay on your school loans - I think up to $2500 per year.

  6. 9:46 - not exactly. I read the case and there, the RN was seeking to improve her then existing skill set. In a nutshell, she was doing quality control work. The MBA was not required as part of her job but wanted to get it to improve her credibility among the other staff members and to help make her more effective with her job duties. The MBA is more of a general degree which isn't required to perform a specific craft (aka law, medicine, CPA, etc.).

    What I find funny about this decision is that the RN got her MBA from the University of Phoenix. Im not badmouthing UP but that school is a franchise. But I think what helped her case was that she was very articulate and organized.

    I should also point out that she won on her own in Tax Court without a lawyer! But then again, the judge maybe felt sorry for her.

    11:36 - the $2500 deduction amount has a phase out. Dont know the details but I think it is around $55,000. Once your income goes above that, your deduction will decrease. The $2500 deduction means squat. It doesnt affect the self employment tax (or social security and medicare deductions if you are an employee) and if you are making $35K to 40K per year, you will be in the low tax bracket anyway so the full deduction is not really that significant.

    You gotta love it.

  7. An individual is working for a law firm while going to law school to get JD degree. The JD degree does not make the individual a lawyer, only passing the bar exam makes you a lawyer. A JD degree does not make you a lawyer, so like the RN, this individual should deduct law school as "continuing education."



Blog Template by YummyLolly.com - Header Image by Arpi