CFA Tax Deduction

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montanidate

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Any thoughts on deducting CFA exam enrollment costs as eductaion expenses for 2011 taxes?
 
this is a question asked every year around this time, and every year the answer is the same … will not fly. maybe you want to check with a CPA to see if it would work. get a fresh professional opinion.
 
i dont see why it would not fly? It is a legitimate education expense. Never tried though because i don’t pass the standard deduction.
 
But if that’s the case, you might as well just try to deduct all kinds of crazy things and hope you won’t get caught.
 
If you’re already in the investment profession, it’s deductible so long as those costs are incurred to maintain or improve skills. The rub is if you’re not already in the profession – then you’re probably out of luck.
cpk123 wrote:
this is a question asked every year around this time, and every year the answer is the same … will not fly. maybe you want to check with a CPA to see if it would work. get a fresh professional opinion.
Click to expand...
 
It’s very relevent considering that all the education deductions require you to attend an accredited institution.
what part of the tax code are you looking at?
 
“Employees generally can deduct the expenses they incur for education if the education either (1) maintains or improves skills required in the employee’s present work, or (2) is required by the employer or the law to keep the employee’s salary, status, or job, and the requirement serves a business purpose of the employer (Reg. Sec. 1.162-5). Deductible expenses include tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs.”
 
Ok, so before I went into equity research I used to do tax retuns for HNW and got a Masters in Taxation. You all are partially right and partially wrong (except for Hank Moody who is right).
As long as the CFA is not a condition of your employment and is used to increase or maintain you skills in your field (you’re not in IT and want to switch to research) it’s deductible. The fact that it leads to a professional designation is immaterial. Remember BAR makes you a lawyer, CPA make you a CPA, there is NO such thing as a CFA (it’s not a profession)…you are a charterholder but it doesn’t qualify you practice before any board, certify an audit, sign a tax return, or argue a court case.
Regarding education expenses, it’s not an accredited institution, it’s an ELIGIBLE institution. which includes accredited institutions and a whole host of others. 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. And this pertains to educational expenses only. Expenses to maintain your knowlege are different and can be seminars like those run by you local society like NYSSA.
Here’s the rub, they’re all subject to the 2% floor on unreimbursed business expense. So, in all liklihood, the deductions are phased out by anbody who is working in the field.
 
You’re probably fine with your deduction. The fact you’ve had no trouble is possibly because you haven’t been audited.
 
I’ve deducted the 1st two exams when I was still in IT. My argument would have been that I supported financial and treasury systems and the CFA education was invaluable to help me in my job function. All of which is true. I did do this under my consulting company I contracted under, not as an individual though.
 
jlive1975-
And that’s probably fine. Some things in taxation are a bright line test (whether or not someone can claim you as a dependent) and other issues are based on “facts and circumstances” (what are expenses used to increase or maintain your skills). IT at a brokerage or asset manager would probably be allowed, the help desk/call center for LL Bean, not so much.
I guess the main point I was trying to make is there are two types of expenses at work here. Qualified educational and those used to maintain/improve your skills. CFA expenses are not qualified educational expenses; however, they may very well be the latter (and deducted with cummulative unreimbursed business expenses subject to a 2% of AGI floor).
But just because a deduction wasn’t caught or questioned, which is a question of exposure, doesn’t mean it was proper.
 
Thank you for the good discussion here. I ended up deciding not to deduct. Peace of mind is huge for me when it comes to taxes:
Least favorite activities: (worst to best)
1.) doing my taxes
2.) studying for Level III twice
3.) cleaning the shitter
 
Of course you can deduct it! I ALWAYS deduct my cfa registration, books, classes, study materials, and sometimes even commute costs. It’s a legitimate educational expense that also happens to be work related! I am always shocked at how scared people are of being audited. What’s the worst that can happen (knock on wood)? The IRS will not fine you unless you intentionally conduct a tax fraud … if it’s not intentional the worst that will happen is that you have to pay back your portion of unpaid taxes plus interst, which is probably 0.5% right now so big whoop.
 
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