Need Training or Work-Related Education to Run Your Business? Financial Incentives Sweeten the Deal
by NicoleD, Former Moderator
- Created: November 17, 2010, 2:08 pm
If you are self employed, you know first-hand how much
research and focus it takes to get your business up and running. The list of topics you must familiarize
yourself with including tax laws, government regulations, selling to customers-
is long and varied. Chances are, you
are;t an expert at it all, but tha-s ok.
There are plenty of free and low-cost training opportunities available
Taking Tax Deductions
If you are self employed, you can deduct some education
expenses, according to the Internal Revenue Service (IRS)*. Self-employed individuals deduct expenses for
qualifying work-related education directly from your self-employment income.
This reduces the amount of your income subject to both income tax and
Check with your accountant for details because the IRS has
strict guidelines for deducting expenses. If you need assistance in determining if
your education qualifies under IRS rules, use their
Business Deduction for Work-Related Education guide
as a reference. Generally,
qualifying work-related education must
meet at least one of the following two tests:
1. The education is required by the law to
keep your present salary, status, or job.
2. The education maintains or improves skills
needed in your present work.
However, even if
your education meets one or both of the above tests, it is not qualifying as-work-related
educatio' if it is needed to meet the minimum educational requirements of your
present trade or business, or if it is part of a program of study that will
qualify you for a new trade or business.
For example, if you
are a home-care nurse, you may not be able to deduct the expenses associated
with your initial board certification training. However, after you are
certified, if the state requirements change resulting in your need for
additional training, you may be able to deduct the expenses incurred from your
new training. Additionally, you may not be able to deduct expenses from a class
on exporting goods, as that is not related to your trade as a nurse
If you want to
get more training or education than what is required by the law, it may qualify
as'work-related educatio' only if it maintains or improves skills required in
your present work. See the IRS guide on Education To Maintain or Improve Skills for details.
Taking Additional Deductions
may be able to deduct education-related business expenses such as travel
to-and-from a training or subscriptions to industry periodicals. Learn
more about deducting business expenses in the Small
Business Tax guide.
Employers can generally deduct employee educational expenses
if the training maintains or improves job-related skills, or if employees are
required to obtain the education as a part of their current job. According to
the IRS, if you pay or reimburse education expenses for an employee, you can
deduct the payments if they are part of a qualified educational assistance
program. Deduct them on the'Employee benefit program'
or other appropriate line of your tax return. For information on educational assistance programs, see Educational Assistance in section 2 of IRS Publication 15-B.
Though the federal government does not provide grants to
businesses for training or education, it does allocate funds to states and
local work-force boards, which decide what industries and areas to support.
Different states have different requirements for supporting
training, including which industries are eligible and yearly stipend limits. To
learn more about programs in your state and whether your business may qualify,
contact your local One-Stop
Career Center, or inquire about your stat's workforce training program
(the name may vary depending on your state).
You can also contact your stat's economic development
agency, which may offer training assistance, grants, and additional tax credits
to eligible businesses. Locate
your state economic development agency at Business.gov.
Finding Free and
Remember that several free
counseling and training programs are available to help you start and expand
your small business. These services cover all aspects of managing a business,
from getting a loan to developing business plans and marketing strategies.
Business Development Centers
Free start-up advice, training and counseling services for entrepreneurs
and small businesses
Counseling, training and business development specialists who provide free
and low-cost services in your area
- SCORE -
Service Corps of Retired Executives Association
Free mentoring, business counseling, and low-cost workshops in locations
throughout the United States
For more free and
low-cost training opportunities, including online resources and in-person
services near you, read the Business Training and
Assistance Guide at Business.gov.
- For more information on education
expenses, see IRS
*This information is current as of 2009 returns. Please
refer to IRS guidance for the most up-to-date information.
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