My sister's daughter is in college. After she is done (4 years), she will most likely manage my sister's restaurant. Can my sister have a write-off as a business incurred education/learning expense?
2006-12-20 09:05:16 · 6 answers · asked by Amanda R 1 in Business & Finance ➔ Taxes ➔ United States
Not as a business expense. I assume her daughter will continue to be a dependent. In that case she will qualify for the Hope Credit for two years and then the Lifetime Learning Credit.
If your niece ceases to become a dependent, then she will be able to claim the credits.
If your sister has a restaurant, I assume she has a CPA. That would be the best place to ask.
2006-12-20 09:15:59 · answer #1 · answered by skip 6 · 0⤊ 0⤋
Education expenses may be deductible as an employee business expense, however, the education expenses must be for education related to the employee's existing job, not a new career. Managing your sister's restaurant would be considered a new career for her daughter, not to enhance her existing career.
Example:
A person is working as an accountant/bookkeeper. They are taking classes so they can sit and pass the CPA exam to become a certified accountant. This would be a deductible education expense. Taking classes to become a licensed chiropractor would not, since being a chiropractor would be a new career.
2006-12-20 17:29:22 · answer #2 · answered by jseah114 6 · 0⤊ 0⤋
If the daughter worked full time for your sister and your sister is willing to provide all employees with same benefit she could adopt an educational reimbursement plan that would allow up to $5,250 per year to be paid for any educational expense.
Otherwise no the expenses would not be deductible since the degree would qualify the daughter for a new career.
2006-12-20 18:42:26 · answer #3 · answered by waggy_33 6 · 0⤊ 0⤋
Short answer - NO. Long answer is in IRS Publication 17:
"Qualifying Work-Related Education
You can deduct the costs of qualifying work-related education as business expenses. This is education that meets at least one of the following two tests.
1) The education is required by your employer or the law to keep your present salary, status, or job. The required education must serve a bona fide business purpose of your employer.
2) The education maintains or improves skills needed in your present work.
However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it:
1) Is needed to meet the minimum educational requirements of your present trade or business, or
2) Is part of a program of study that will qualify you for a new trade or business.
You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree."
2006-12-20 23:06:28 · answer #4 · answered by teehee 3 · 0⤊ 0⤋
No. But she might be able to take the Hope Credit (if the daughter is in her first two years of college) or the Lifetime Learning Credit for her daughter's expenses, if her daughter is her dependent and your sister is paying the daughter's college expenses.
2006-12-20 17:19:17 · answer #5 · answered by Judy 7 · 0⤊ 0⤋
Not that I know of. If the daughter lives with her mother and is still in school or under 19, she's still a tax deductible dependent.
2006-12-20 17:13:58 · answer #6 · answered by beez 7 · 0⤊ 2⤋