Is Tutoring A Tax Deductible Expense?
Tutoring is a great way for students to save money on expensive classes they’re taking, but are they eligible for a tax deduction?
Let’s look at the rules and regulations to find out if you can get a tax deduction for tutoring your explanation child or another student.
Yes! The Internal Revenue Service has determined that tutors may claim their tuition as an education expense under Section 162.
This means that any fees paid by a taxpayer in connection with his/her own schooling qualify as an educational deductible expense.
This includes both private and public schools. It also covers coursework offered through correspondence programs, like distance learning courses.
However, it does not include:
- Tuition provided free from a school board because the taxpayer receives no compensation;
- Fees charged to the student because these are considered part of the cost of attendance regardless of whether the service was received in person or via remote access;
- Amounts billed from the regular instructional program since such amounts do not represent additional costs incurred beyond normal operating expenses;
- Fees associated with tutoring services other than instruction, including administrative charges;
- Costs related to books and supplies used for business.
- Any amount for which payment cannot be made within 30 days after each taxable period.
It should be noted that some states have passed laws requiring the state Department of Education to pay tutors more than $10 per hour.
So even though you might think you’ve qualified for a federal income tax deduction, you won’t receive one.
In this article, we’ll explain what those requirements are and how you can qualify for the deduction.
What are you qualifying for?
The IRS considers anyone who provides tutoring expenses to someone else’s children while enrolled full time in elementary or secondary schools to be providing “personal” rather than professional services.
This means that only 50% of the fee will qualify for a tax deduction.
You must meet all three of the following criteria to qualify for a 50 per cent deduction.
1) You charge less than $30 per hour of tutoring time. If you provide more than four hours of talks about tutoring expenses outside of class time, then your hourly rate would need to exceed $15.
2) Your clients’ primary purpose for seeking your tutoring expenses is academic advancement. For example, they want to help to solve math problems or doing homework assignments.
They don’t just seek help with social skills or life management issues.
3) Your client pays for your services using funds taken from home. In order to deduct the entire cost of your services, your client must use personal funds to cover the total cost of the session.
If you’re unable to satisfy all three conditions, then you’ll still be allowed a partial deduction based on the ratio between the total hours worked and the number of hours considered exempt.
How can you claim tutoring fees on your income tax?
- To claim your tuition deductions, fill out Form 1040 Schedule A. On this form, enter the name of the individual receiving your services along with the date upon which you rendered them.
- Then, list the names of the students involved along with their grade level.
- Next, make sure that you identify the reason why you were hired — e.g., tutor, teacher assistant, etc.
- Indicate if the payments came from your pocket money, savings account, checking account, or another source.
Note that although most parents of children work during the summer months when kids take vacations, many find themselves called back into employment due to unforeseen circumstances.
What expenses are tax deductible?
According to the Internal Revenue Service, there are two types of educational expenses that may be deducted as an itemised deduction on your federal return:
1. Tuition and other education expenses paid by the taxpayer.
These include costs associated with enrolling at school, such as tuitions, textbooks, lab fees, field trips, music lessons, art classes, sports equipment, extracurricular activities like clubs and scouts, and any other charges connected with attending school.
2. Expenses incurred for instruction received from teachers employed by the institution where the student was enrolled.
This includes costs like lunches provided by cafeteria staff, transportation tickets issued by bus drivers, parking passes purchased by instructors, office rent, insurance premiums, postage stamps, photocopying equipment rentals, and computer software licenses.
In both cases, it’s important to note that these expenses must have been necessary in order for you to receive the benefit.
This means that even though you might not otherwise consider certain things essential, you will justify their inclusion under one of the above categories.
A Wife, a mum and a Tutor! I am the Lead Editor at TheTutor.Link & also the Head Tutor there. I love teaching seeing young minds flourish. I also love blogging and sharing my experience on the world wide web.