How to Write Off Your Nursing CEUs When You File Your Tax Returns
The good news is that you can deduct the expense of nursing continuing education courses from your taxes, the bad news is that there are lots of caveats to the good news. In general, if you are taking nursing CEs to advance your knowledge and you are not taking them to change your career, you may be able to deduct them. In order to do so you have to know the tax territory and save your receipts, so let’s dive into the particulars (also, here's a quick video showing how you can write off your nursing ceus for tax purposes).
You can’t claim any credits or deductions without receipts so the first thing you to do is save your receipts for any and all of the following:
- CEs for training, seminars, courses.
- Books, medical journals and documents that contribute to ongoing education as a nurse.
If you are taking CEs in a classroom the provider will give you a hard copy certificate of attendance. If you are taking online courses you will receive an electronic certificate of completion. You can request a hard copy as well and that is usually a good idea. Always make sure that “BRN” appears on the certificate, confirming that the provider of the course is approved by the “Board of Registered Nursing”.
Tax breaks for Nursing CEUs
If you have your undergraduate degree, the tax credit that your CEs will qualify for is called the Lifetime Learning Credit. You can learn all about it on IRS tax form “2016 Publication 970”. We have read it in order to give you the general guidelines, but when you file your taxes read the form in detail to make sure you comply with all its requirements.
The IRS Lifetime Learning Credit allows you to claim up to $2,000 for qualified education expenses for the year. You can claim it for as many years as you pursue CEs. It is a tax credit, as opposed to a tax deduction, which means that it reduces the amount of your income that is used to calculate your taxes.
In order to claim the lifetime learning credit you must meet all three of these requirements:
- You pay qualified education expenses of higher education.
- You pay the education expenses for an eligible student.
- The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
You do not qualify for the lifetime learning credit for 2016 if you meet any of the following requirements:
- Your filing status is married filing separately.
- You are listed as a dependent on another person's tax return (such as your parents').
- Your modified adjusted gross income (MAGI) is $65,000 or more ($131,000 or more if filing married filing jointly).
- You (or your spouse) were a nonresident alien for any part of 2016 and the nonresident alien didn't elect to be treated as a resident alien for tax purposes.
What education expenses qualify?
- Qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
- Qualified education expenses paid in 2016 for an academic period beginning in 2016 or in the first 3 months of 2017.
- An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as defined by the educational institution. If you are accruing credit hours or clock hours, rather than studying by academic period, you can use each payment period as an academic period.
- Loans qualify: You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan.
- If you have had to withdraw from classes: A lifetime learning credit can be used for qualified education expenses not refunded when a student withdraws.
What are “qualified” education expenses?
The IRS defines “qualified” education expenses as follows:
- Tuition and certain related expenses required for enrollment in a course at an eligible educational institution.
- The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills - but not to change careers. (more on that below)
- An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.
- Student activity fees and expenses for course-related books, supplies, and equipment if they are paid to the institution for enrollment or attendance.
Forbes magazine has great advice for professionals deducting continuing education expenses from their taxes and it applies to nurses as well. Here are a few of their pointers:
- You can’t deduct CEs your employer paid for.
- An educational expense will qualify if it meets either one of two tests.
- A: The expense maintains or improves skills that are required in your employment or business.
- B: The expense meets the express requirements of your employer imposed as a condition to the retention of your employment, status, or rate of pay.
- CEs that qualify you for a new career cannot receive a lifetime learning credit. This is a complicated point with many fine nuances. Travelnursing.com explains the most recent case, Lori Singleton-Clarke v Commissioner, T.C. Summ. Op. 2009-182. A nurse won the right to deduct $15,000 in educational expenses while pursuing her MBA. The IRS said it led her to a new job. The court said she was already established in the trade, the MBA just advanced her skills. Simply put, if the CEs are preparing you for a career outside the one you are currently working in, they probably won’t be accepted for tax credits.
The bottom line is that there is tax relief for your continuing education activities. Just make sure you save the receipts and clearly understand the guidelines of IRS form 2016 Publication 970. You have to pursue CE throughout your career and you will gain new knowledge from them - it’s an added bonus to get a tax break as well.