Skip to comments.Nurse Outduels IRS Over M.B.A. Tuition
Posted on 01/11/2010 1:58:39 PM PST by STARWISE
How One Woman Went to Tax Court and Won Deduction
A Maryland nurse accomplished two rare feats in her battle with the Internal Revenue Service: She defended herself against the agency's lawyers and won, and she got a ruling that could help tens of thousands of students deduct the cost of an M.B.A. degree on their taxes.
The U.S. Tax Court handed Lori Singleton-Clarke her victory last month, saying the 47-year-old Bryantown, Md., woman had properly deducted nearly $15,000 in business school tuition. The Tax Court ruling should make it easier for many other professionals to deduct the expense of a Master in Business Administration degree.
After getting word of the court decision, "I nearly yelled the roof off the house," Ms. Singleton-Clarke says. "I still can hardly believe it."
The IRS's rules on deducting work-related tuition are complicated and onerous, ultimately preventing most students from deducting their tuition. But this case clarifies the rules and will likely lead to more taxpayers taking the deduction, tax experts say.
(Excerpt) Read more at finance.yahoo.com ...
Uhhh, basic and routine.
Continuing education is fully deductible if it only enhances your current profession (or is required) and does not qualify you for a new career.
QED. Bachelors are not deductible, most Masters are. Even counselling MAs for teachers are deductible. Sorry about law school, that’s a new career.
Simple? Been this way for dozens of years.
I am getting a bachelor’s that is deductible.
My MBA student loan now up to $30k how much will I be able to write off since I work full time?
Well, if it meets the requirements and doesn’t qualify you for a new career, then it may. But, you might get an argument if you tell the IRS it is a bachelors.
Almost any educational course could potentially qualify you for a new career and the IRS has been traditionally arbitrary in throwing out educational expense deductions for precisely that reason.
It is nice to see a citizen turn the tables on the sonzabitches. Bravo for her!
Then why the IRS disallowance and 3+ yr
As an FYI . . . this is a good reason to get your master's degree on a part-time basis while holding a full-time job -- provided, of course, that you can justify the MS or MA under the "enhancement" or "maintenance of skills" standards.
Agreed! The nurse has a point. Some doctors and administrators can be a real pain. So said a friend who was both an orthopedic surgeon and hospital administrator. He worked at one of the suburban hospitals in the Chicago area before moving to the exec position at a small hospital in northern Wisconsin.
Agreed this was not really a David and Goliath story in the traditional sense, though Nurse Lori had to navigate the intimidating IRS bureaucracy. Rather it's a taxpayer education story in how real genius is most often composed of preparation and persperation. The comment of the judge is most instructive.
Because they can...they have deep pockets: YOURS.
A gift for teachers, journalists, nurses......
Some of it is covered through my employer, reimbursement, and they have a whole checklist to fill out to confirm that.
Not my experience and I've seen dozens flow right through. If you are with the IRS, then you may know something we don't. But, the standard is still, it has to improve your performance in the current career and not qualify you for another career.
The argument of the nurse was, of course, logical...or the court wouldn't have sided with her. But, this was not some exotic, out-of-the-park, lucky shot.
Well, many possible reasons. For example, it sounds like she went to the examination herself. Maybe she said, "It wasn't really required, but I thought this would be fun because I'm bored in my job." Boom. Gone. Then she gets serious about her words when it goes to court.
Maybe, she added a bunch of other non-education related stuff in there to begin with (lunches, driving to unrelated classes, phys. ed. classes like "golf", etc.) Lots of folks push the edge on this category.
Maybe, she lost all of the proof of payment and ignored the requests for substantiation. Then, she got concerned during the court case and dug it up.
Again, there are other reasons that the IRS would argue this and without seeing the court transcripts, I just don't think we should always jump to conclusions. I know a number of examiners and they are quite reasonable folks. And, I know a few taxpayers that are total flakes, cheats, and liars.
Now here is common sense and perfect compliance with the law, all rolled up in one great idea. Thanks for sharing.
Good for you.
The book ended up getting Hansen unjustly convicted on some bogus campaign finance charges for which he was thrown out of congress, spent time in federal prison and was later exonerated.
But it also opened up some hearings on the abuses of the IRS where it was revealed that they would specifically target middle income people who they felt would cave because they didn't have the resources to fight back.
The Taxpayer's Bill of Rights and other curbs to the IRS which happened when the GOP took control of congress in 1995 were a direct result of the IRS hearings which Hansen courageously held during his final years in congress.
So, yes, the IRS has become much more reasonable thanks to the curbs put in place in the mid-1990's. However, not that they are politically being empowered to confiscate wealth for the nanny state, the pendulum is clearly swinging back the other way now.
There were likely abuses along the way. But, even the concept of "targeting" is one of those odd terms. Did they target people cheating on their tax returns who did not have the resources to fight back? If so, then I have no sympathy for the targets, any more than I have sympathy for the illegal aliens they claim Sheriff Joe Arpaio is "targeting". Go target! We want to catch the bad guys that don't pay, since they are making you and I pay more.
But, really, far fewer cases of abuse by the IRS seem to occur versus the number of crooks that don't report income, deal in cash "under the table", and other such crimes.
You need to get Hansen's book and read it. And, yes, the IRS targets people because of their politics. Hansen was the most prominent Republican example. Former Senator Joseph Montoya of New Mexico is a Democrat example.