By topic: Education

Did You Overfund a Section 529 Plan? Consider a Roth IRA Rollover

If you establish a Section 529 college savings plan for a child or other family member and he or she doesn’t use all the money or decides not to go to college at all, starting in 2024 you can roll over up to $35,000 of the money into a Roth IRA for the beneficiary. But such rollovers are subject to complex rules and require long-term planning, as we explain in this article.


Despite Its High Cost, This Education Is Deductible

If you attend an expensive educational program, do you have to amortize the cost, or can you expense it? Further, would such a program trigger an IRS audit?

Real Estate Investment Boot Camp

This real estate boot camp deduction is allowed to the taxpayer who is classified as being “in the business” of renting real estate, but not to the taxpayer classified as an “investor in real estate.”

Five Things to Know About Employing Your Spouse

If you own your own business, hiring your spouse to work as your employee can be a great tax savings strategy. But the tax savings may be a mirage if you don’t pay your spouse the right way. Here are five things to know before you hire your spouse that will maximize your savings and minimize the audit risk.

Travel to a Fancy Resort Hotel Where You Use Your Laptop for CE

Discover an innovative continuing education opportunity that combines learning with a luxurious resort experience. This unique event, held at a five-star resort, allows participants to earn business-related education credits and potentially enjoy tax deductions for travel and meals.

If I Hire My Kids, Can I Give Them Tax-Free Education Benefits?

Owning your business has many advantages, including the possible ability to get some tax deductions when you have your business pay for your child’s education—in select circumstances, as we explain in this article.

PDF Download: Tax-Smart Strategies to Pay for College

College is expensive. Luckily, tax law has provisions to help you cover the costs, including Coverdell, Section 529 savings, and Section 529 tuition plans. Of course, there’s more, including tax strategies that benefit both you and your child, as you will learn in this guide.

Three More Answers on “Paying for College—A Handy-Dandy Strategy”

Let’s say you have your business pay your college student $23,255 for a one-time project. As you know from Paying for College—a Handy-Dandy Strategy, the payment is not self-employment income for the student. But what Form 1099 do you use to report the income? Why does tax preparation software try to apply the kiddie tax to this payment? Does the one-time payment mean the student can contribute to an IRA?

How Are 529 College Savings Account Withdrawals Taxed?

The big advantage of 529 plans is that qualified withdrawals are always federal-income-tax-free—and usually state-income-tax-free too. What you may not know is that not all 529 withdrawals are tax-free qualified withdrawals, even in years when you have heavy college costs.

Refresher on Tax-Smart College Savings Strategies for Parents

College is expensive. Data for the 2019-2020 academic year indicates that the average cost of tuition, fees, room, and board was $30,500. Tax law has provisions to help you cover the costs, including Coverdell, Section 529 savings, and Section 529 tuition plans. There’s more, of course, as you will learn in this article.

New Law Kneecaps Stretch IRA—Here’s What You Can Do About It

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) passed last December makes a big change in the stretch IRA—an estate planning device favored by well-off IRA holders. To cope with the downside of this new law, you need to do some planning, as we explain.

Q&A: Are Classes in How to Fix and Flip Houses Deductible?

If you are going to start a new business, you need to know the difference between the expenses you incur before you start the business and the expenses you incur once you have the business started. With proper planning, you can deduct all the expenses, but improper planning can cost you big money.

Eight Answers to Questions About the SECURE Act

The SECURE Act changed many tax law provisions related to retirement and savings. We wrote about the new law last month and have since received many questions. In this article, we give you the answers to eight questions.

Top Eight Changes in the SECURE Act You Need to Know

Our lawmakers did it again. They made more last-minute tax law changes, which the president signed into law on December 20, 2019. One such new law is called the SECURE Act. This new law made a lot of changes to how you save for retirement and spend money in retirement. Don’t worry, though. We’ll give you the most important provisions you need to know, and how they impact you regardless of age.

Self-Employed Senior? Collect Your Rightful Tax Breaks

If you are self-employed, you have much to think about as you enter your senior years, and that includes retirement savings, Medicare, and grandchildren, as explained in this article.

Federal Tax Deductions for Section 127 Education of Grandchild

You can use a Section 127 education plan to obtain tax benefits for yourself (or your corporation) while you help your employee-grandchild through college or other training.

How to Deduct Cruise Ship Conventions, Seminars, and Meetings

If you want to attend a convention, seminar, or similar meeting onboard a cruise ship and deduct all your costs, you face some very special rules. It can be done. But when you know the tax code rules, you will find an enlightened workaround that removes almost all the hassle and gives you what you want.

Update on Claiming Business Deductions for Work-Related Education

Learn how your continuous learning employees probably suffer because of the Tax Cuts and Jobs Act. It’s likely good business for you as a business owner to ease that suffering to encourage this continuous learning. On the personal side, you’ll find the tax law subsidies for your individual education to your liking.

Beware When Children Use IRAs and/or Savings to Pay for College

When it comes to college planning, your lawmakers created some real traps. One big trap is the kiddie tax. This insidious tax destroys the traditional IRA as a college funding source and does much the same to your child’s interest and dividends savings. There’s much to know here, and we make it clear.

Q&A: Tax Deduction for NFL Tickets

You can deduct NFL tickets under the associated entertainment rules. In this Q&A, our member is traveling from Portland to Atlanta to attend a business conference, and while at that conference, he and his team members will attend the NFL game. The conference creates an easy path to this deduction.

Special Needs Education Can Qualify as a Business Expense—Here’s How

Sending a child to a special needs school can be an onerous financial burden, with some tuitions reaching even $100,000 per year. Tax law lets you deduct tuition and other related costs as medical expenses, but you need to know which expenses qualify and how you should deduct them. This article shows you not only how to qualify but also a possible best way to maximize those deductions.

How to Travel to Exotic Locations Using the Seven-Day Travel Rule

When you travel outside the 50 states and the District of Columbia, you can use a special seven-day travel rule to deduct your business transportation costs to and from that business destination even when you work only one day during that trip. The special rules that apply to this seven-day travel are clear and easy to understand.

IRS Expands Tax-Deductible Meetings and Seminars Boondoggle Areas

Tax law places all conventions, seminars, and similar meetings into one of two areas: (a) inside or (b) outside the North American area. When you are outside the North American area, the rules do about everything possible to make your convention, seminar, or similar meeting nondeductible. So, if your group is not a worldwide group, attend conventions, seminars, and similar meetings only in the tax law-defined North American area. (Don’t worry, you’ll find many great locations in the tax code-defined North America area.)

Business Tax Deductions with Section 127 Plan for Child’s College

Establish a Section 127 educational assistance plan in your business to help pay your age-21-or-older child’s college or other education costs. If you are in business and you have a child who is age 21 or older in financial need of educational assistance, this is a plan to consider.

Two Paths to Deducting Certain Business Education Expenses

Business-related classes or seminars can put a serious dent in your wallet, so, of course, you’d like to write off those costs as business expenses. But there are some strict and somewhat tricky rules for deducting business education expenses. In some cases, the education can fail the tax deduction test but qualify for business deductions following an alternative path.

Two-Person Seminar

A precedent-setting court case establishes that one-on-one training can count as a business seminar for tax purposes. Where do you want your one-on-one seminar to take place? Disney World? St. Thomas?

Cut the Cost of College with Tax Credits

The paradox of choice applies when you consider the multitude of tax benefits available when paying educational expenses. In this article, we help you put money in your pocket by taking both the paradox of choice and the complexity out of two education tax credits with our step-by-step guide.

Tap Your Roth IRA the Right Way—Tax-Free and Penalty-Free

A Roth IRA is not your average retirement plan. It’s a retirement savings, boondoggle savings, down payment savings, college savings, and emergency savings plan all wrapped into one. But to realize the benefits, you need to know how to avoid taxes and penalties when you take the money out. The good news: do this right and you can tap that Roth IRA and pay ZERO taxes and ZERO penalties.

You Can Claim Thousands in Business Education Deductions—Unless You Make This One Mistake

The government wants to give you the gift of education. Your lawmakers in Washington created a tax break for courses that improve or maintain your business skills. You can deduct in full the cost of education ranging from a standalone seminar all the way up to an advanced degree—including the cost of an MBA program. But in order to get this deduction, you have to follow a couple simple rules.

Supercharge Travel Deductions by Knowing the Business Day Rules

When you take a trip and spend some of your time on business and some time on personal activities, how much of your expenses can you deduct? What happens to your expenses on holidays? Knowing the answers to questions such as these puts money in your pocket and safeguards you from IRS attack on your travel deductions.

Secrets to Deducting a Convention, Seminar, or Similar Meeting

If you are going to attend a convention, seminar, or similar meeting, you need to know that tax law breaks the Earth into two locations. In location one, you deduct your convention, seminar, or similar meeting if the event benefits or advances the interests of your business. That’s easy. In location two, you have to meet a much more difficult reasonableness standard. That’s not easy.

How the Taxman Gets You with Backdoor Taxes

Have lawmakers inserted any sleight of hand into your Form 1040 tax calculations? Yes, they have! And it’s really terrible. For example, the alternative minimum tax (AMT) rules make you pay taxes on your tax deductions. How’s that for true sleight-of-hand terribleness? The AMT even makes you pay taxes on the personal exemptions the regular tax law grants for your children. It’s outrageous. But, because you own a business, there are some things you can do to get even.

Tax Deduction for Disneyland Tickets

When you attend a convention or similar meeting, your attendance automatically qualifies as you having a substantial and bona fide business discussion. When you precede or follow a substantial and bona fide business discussion with entertainment that takes place in a non-business setting such as going to Disneyland, you qualify to deduct the cost of the Disneyland tickets.

Critical Tax-Deduction Proof for Nine-Day Trip to Jamaica

If you take a nine-day trip to Jamaica, how many days devoted to business do you need to make the trip tax-deductible? What happens when you spend one of those days doing no business and simply playing on the beach? The critical elements in this article give you a crystal-clear explanation of when and why you can deduct certain days, even those days when you do no work.

How to Qualify Conventions and Seminars for Tax Deductions

It’s easy to think that a business convention, seminar, or similar meeting is deductible when in fact it is not. The meeting could be in the wrong location. It might have the wrong people in attendance. Its purpose might not rise to the level needed for deduction. Protect your deductions for conventions, seminars, and similar meetings by knowing the rules in this article.

Tax-Deductible Reasons for Business Travel

One of the many benefits to owning your own business is the ability to deduct travel expenses, especially when you combine pleasure with business travel. You likely know lots of reasons for legitimate business travel, but this article will add new reasons and additional knowledge.

How to Deduct Travel by Car, Train, Plane, or Boat

You have a wide variety of choices on how to travel for business. You can use a car, train, plane, or boat. You can fly economy, business, or first class. Should you own a plane, you can use it for business travel. Special rules apply to the plane, boat, and car; accordingly, if you travel for your business, you should know the rules in this article.

Why This Travel Deduction to Cancun, Mexico, for an Online CE Course Fails

Beware of online continuing education courses that claim you can participate in them at any location of your choosing (such as a fancy resort in Cancun) and deduct airfare, meals, lodging, and other expenses for attending. The problem with these courses is that you fail tax law’s primary purpose test for deducting travel expenses. Thus, to deduct a videotape or online course, the course has to be offered at the site.

New IRS Ruling Improves Tax Deductions for Business Travel to Panama

Panama is now part of the tax-defined North American area where tax deductions are favored by tax law. For entry into this favored tax-deductible area, Panama had to agree to give the IRS and other government agencies banking and other information that otherwise was not available under Panama’s bank secrecy laws.

Tax Deductions for Dues and Expenses of Being a Mason or a Lion

Tax law favors and allows deductions for civic and public service clubs and even names some favored clubs. But tax law does not allow dues deductions for airline, hotel, country, golf, athletic, and business-meal clubs.

Use Business Tax Deductions to Build Your Child’s College Fund

Your business ownership creates an opportunity for a tax plan that can give you tax deductions for hiring your children and can give your children tax-free income. But your tax plan does not stop there. Your children might start Roth IRAs where they can invest their tax-free income in a college fund. Done right, as described in this article, the government pays you for your help with this plan.

Tax Tips for the S Corporation’s Fringe Benefit Realization

Tax law creates trouble for selected fringe benefits that the S corporation gives to a more than 2 percent shareholder. The loss of benefits and accompanying complications are factors to consider in the selection of the S corporation as your choice of business entity.

Tax Audit Tips for Travel, Entertainment, and Education

How do you lose deductions to the IRS in an audit? Worse, how do you compound that loss of deductions by taking your case to court? In this article, see how one proprietor managed to do both.

Business Education Tax Guide

Learn how the government pays you to get educated. The basic rule: you may deduct education that maintains or improves the skills you need in your business, providing the education does not qualify you for a new business.

Big Tax Breaks for Hiring Your Child

Tax law favors the son or daughter working for the mother or father in a proprietorship or husband and wife partnership. If you operate your business as a corporation, you also can come out ahead by hiring your child.

How Children Employed by Parents Can Use IRAs to Pay for College

Having your child work in your business produces college funding strategies with both the Roth and the traditional IRA. As an added bonus, you can use the traditional IRA with earned income to eliminate some kiddie tax.

Travel Tax Deductions Can Include Educational Trip to the Bahamas

When you know what you are doing, you can qualify trips to the Bahamas and similar destinations as tax-deductible trips.

Federal Tax Deductions for Section 127 Education of Grandchild

You can use a Section 127 education plan to obtain tax benefits for yourself (or your corporation) while you help your grandchild through college or other learning.

Federal Tax Deductions with Section 127 Plan for Child’s College Education

Establish a Section 127 educational assistance plan in your business to help pay your age 21 or older child’s college or other education costs. If you are in business and you have a child that’s age 21 or older in financial need of educational assistance, this is a plan to consider.

Sample Educational Assistance Plan

As a subscriber, you may download this sample Section 127 educational assistance plan in Microsoft Word. Then, simply modify the document to your business use.

Education Deduction for CFP

You may deduct education that improves or maintains the skills you need in your current business, if this education does not qualify, or lead to qualifying, you for a new or different business.

Deducting Golf after the Office Meeting

Golf before or after convention meetings has been preapproved by the IRS as deductible associated entertainment that follows or precedes a bona fide and substantial business discussion. Golf before or after an office meeting has no such preapproval. It must pass the “associated entertainment” test to qualify for a deduction.

It’s Ski Season—Let’s Make Your Skiing Deductible

The first thing to get straight with the skiing deduction is that it is deductible as associated entertainment. Thus, you need a bona fide business discussion in a business setting before or after the skiing. If you are staying overnight, remember that lodging for business entertainment purposes is not deductible, but lodging for business education or meetings is deductible.


No Deduction for One-on-One Investment Training

Learn from one taxpayer’s mistakes: know the details regarding seminars and training! Investors cannot deduct training, so you have to follow a few of our tips to help make one-on-one seminars deductible. Also, we give you important information about tax reform and tax changes.

Trip to Canada

It is surprisingly easy to deduct a trip to Canada, even if you only work one day while there. Use the sandwich rule, and you can deduct even more.

Cost of MBA Lost as Education Deduction

With some tax planning, you can pretty well put together an education deduction for an MBA. As long as it enhances your career and doesn’t set you on a new career path, the MBA is deductible.

Cruise to Alaska

It is easy to deduct business trips within the US. We have a series of criteria and tips to help you plan your next (business) trip.

Hunt Doctor Courses

You need a solid plan when you want to combine deductible education with deductible hunting.

How Safe-Harbor Rules Can Audit-Proof Your Cruise to the Caribbean

Ask yourself two questions: First, would you like to take a cruise? Second, would you like to get a tax deduction for the cost of your cruise? If you answered “yes” to both questions, this article is for you.

Travel Deduction for Educational Seminars

When you combine business and personal travel, tax law contains specific rules on what you can and cannot count as a business day. These rules determine if your transportation, lodging, and meal costs are deductible in full, partially deductible, or not deductible at all.

Real Estate Investment Seminar

This real estate boot camp deduction is allowed to the taxpayer who is classified as being “in the business” of renting real estate, but not to the taxpayer classified as an “investor in real estate.”

Top Producer Trip

When you win a top producer award trip to a fancy resort or location, create educational events for yourself to qualify your trip for business travel deductions. When you get this right, you offset the 1099 award value with bona fide business travel expenses.

Getting a 100% Deduction for Meals Served to Independent Contractors

Meals served to your employees and independent contractors at training sessions and incentive award trips are subject to the 50 percent cut that applies to entertainment and meals. To qualify for a 100 percent deduction, you need to include the meal as compensation to the employee or independent contractor. That’s what many Fortune 500 companies do.

How to Make Golf Deductible

Golf does not qualify as a deductible expense just because you talk about business on the golf course. Golf does qualify for a deduction as associated entertainment when you have the right business discussion in a valid business setting before or after the golf, generally the same day.