Professional Development Deduction: What You Can Write Off

Investing in your skills through professional development is often critical for business success. Fortunately, under IRS rules, certain educational expenses may be deductible if they maintain or improve your skills for your existing business or trade.

IRS Tax Code Reference

Deductibility of educational expenses is governed by:

• Internal Revenue Code (IRC) §162(a)  Trade or business expenses.
• Treasury Regulation §1.162-5  Expenses for education that maintains or improves skills required in the taxpayer’s trade or business.

Relevant IRS Forms:

• Form 1040 Schedule C  Profit or Loss from Business
• Form 2106  Employee Business Expenses (for employees, limited in most cases after TCJA)

When Can You Deduct Professional Development Costs?

You can deduct professional development expenses if:

• The education maintains or improves skills required in your current business or profession.
• The course is directly related to your business activities.

You cannot deduct expenses if:

• The education qualifies you for a new trade or business.
• The course is for personal enrichment unrelated to your business.

Deductible Examples

• Industry conferences or seminars
• Certification renewals
• Continuing education classes
• Skill improvement courses (e.g., marketing, accounting, coding)

Non-deductible examples:

• Courses for switching careers
• Degrees qualifying you for a new profession

Example:

Scenario:

• A self-employed graphic designer enrolls in an advanced Adobe Photoshop certification course costing $2,500 to improve existing skills.

Result:

• The $2,500 cost is deductible on Schedule C as a business expense, reducing net income and taxable self-employment earnings.

Step-by-Step Compliance Checklist

1. Confirm the education relates directly to your existing business.
2. Keep detailed records: course syllabus, payment receipts, and proof of completion.
3. Deduct costs under “Other Expenses” on Schedule C (Form 1040).
4. Retain documentation for at least three years in case of IRS audit.
5. Avoid deducting education that is unrelated or qualifies you for a new profession.

Important Points to Remember

• Meals, lodging, and travel related to attending a seminar may also be deductible (subject to separate IRS rules under IRC §162).
• Online courses qualify if they meet the skills maintenance criteria.
• Expenses must be “ordinary and necessary”  common and accepted in your business.

Conclusion

Writing off professional development expenses can be a smart way to invest in yourself while reducing your taxable income. However, strict IRS rules apply, and documentation is critical.

A CPA can help ensure that only qualifying expenses are deducted correctly and safely.

Schedule a meeting with Anshul Goyal, CPA to structure your business education deductions properly for 2025:
https://calendly.com/anshulcpa/

FAQs

Q1: Can I deduct the cost of a degree program?
Generally no, unless the degree is required to maintain your current professional status, not to qualify for a new profession.

Q2: Are online courses deductible?
Yes, if they directly improve skills related to your existing business.

Q3: Can I deduct travel costs for attending a seminar?
Yes, travel costs may be deductible if the seminar relates directly to your business.

Q4: What if part of the course is business-related and part is personal?
Only the business-related portion can be deducted, and you must allocate costs appropriately.

Q5: Is coaching or mentoring deductible?
Possibly, if the coaching is directly related to maintaining or improving your business skills.

About Our CPA

Anshul Goyal, CPA, EA, FCA, is a licensed Certified Public Accountant in the United States. As an IRS-authorized Enrolled Agent, Anshul specializes in helping self-employed individuals and small businesses maximize their deductions and stay compliant with IRS educational expense rules.