Education expense deductions can be beneficial to student taxpayers or their parents, however, knowing what qualifies as an appropriate expense is important. As the taxpayers in the next situation soon learned, even if you spend significant time educating yourself in various topics, if the expense is not deemed ordinary and necessary, it will be categorized as a non-deductible personal expense.
The Situation
Married taxpayers both worked at Seminole State College – the husband as an adjunct math and communications professor, the wife as the campus librarian. On their tax return, the couple deducted their home internet, television, books, DVDs, and CD expenses, claiming them to be unreimbursed employee expenses. With a doctorate degree in communication, the husband testified that the cost of maintaining a similar terminal degree falls on the individuals, who must spend their own time developing, gaining, and exploring information, to continue their knowledge and, in theory, self-educating.
IRC Section 162 allows a taxpayer to deduct the cost of internet service at home if it is a necessary and ordinary expense to the taxpayer’s job or business. Otherwise, the expense is considered personal, and therefore, non-deductible.
In his eyes, the taxpayer believed that access to the internet was crucial to developing his general knowledge. He argued that any incurred expenses should be considered deductible as unreimbursed employee expenses as they were used to increase his general knowledge. To him, this included the money spent on books, CDs and DVDs, as he claimed they were necessary to perform his job functions. Despite this, he did agree that he hadn’t been required to purchase the material by the university, nor was it expected of him to do so to continue at his job.
In this circumstance, general knowledge expenses are not deemed ordinary and necessary to the profession of a college professor, and instead fall under the notion of a personal expense. The court acknowledged the amount of time and resources expended by the taxpayers to fuel their quest for knowledge, however eventually ruled that these expenses cannot qualify as unreimbursed employee expenses for either a professor or college librarian.
