IRS Ruling May Make It Easier to Deduct MBA Tuition Expense
Last month, after fighting a battle on her own with the IRS for four years, Lori Singleton-Clarke won her case. The U.S. Tax Court ruled that Ms. Singleton-Clarke, an RN, had properly deducted the cost of her MBA tuition as a business-related expense on her 2005 tax return.
As everyone knows, the IRS rulebook is thousands of pages long and almost impossible to decipher. Very few people who choose to fight an IRS ruling have the preparation, perseverance, and gumption to keep fighting, and without a lawyer no less! (She didn't have enough money for one.) In fact, according to Tax Analysts, only about 10% of similar cases were won in 2009.
Ms. Singleton-Clarke delved into IRS Publication 970 which discusses, in 12 chapters, the myriad of tax benefits that may be available if you are saving for or paying education costs. Near the end of the publication in Appendix B there is a complex table that gave her the guidance as to whether she would qualify to take a business deduction for work-related education. She believed that she did qualify, having earnings of approximately $50,000 and almost $15,000 in tuition expenses from an accredited online business school.
This ruling should help other students who are looking to enhance their job-related skills through higher education, particularly MBA students, get more favorable IRS tax treatment for their tuition expenses. Thank you Ms. Singleton-Clarke!