Your training expenses may be deductible
FIRE OFFICERS and fire fighters who have in the past paid part or all of their expenses for special training courses to improve job skills may now qualify for certain income tax deductions. This is the result of recent legal decisions which have a direct bearing on educational activities.
For many years a fight has raged between taxpayers and the tax collector over the deductibility of educational expenditures. Foremost have been the efforts of school teachers to force the Commissioner of Internal Revenue to liberalize his regulations and interpretations of the Internal Revenue Code. With each successful court case (Lillie Mae Green in the Tax Court, Clark S. Marlor in the Circuit Court of Appeals*), the door has been opened wider for a more realistic treatment of expenses incurred for education and training.
Recently a new set of regulations has been issued for salaried individuals and for self-employed persons. They provide that expenditures made by a taxpayer for his education are deductible if they are for education (including research activities) undertaken primarily for the purpose of: Maintaining or improving skills required by the taxpayer in his employment, trade or business; meeting the express requirements of a taxpayer’s employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the taxpayer of his salary or status.
Expenditures made by a taxpayer for his education and training are not deductible if they are education undertaken primarily for the purpose of obtaining a new position or substantial advancement in position, or primarily for the purpose of fulfilling the general educational aims or other personal purposes of the taxpayer.
How do these new rules apply to the salaried fire fighter? Fire Chief Jones takes a course in advanced fire fighting to aid him in the administration of his fire department; Candidate Smith takes courses which will enable him to take the civil service examination for the position of fireman.
Chief Jones can deduct his expenses because they were undertaken primarily to improve skilLs by him, but Candidate Smith is not allowed to take deductions for his courses because they are for the primary purpose of qualifying him for a new position. This is just one example to clarify the difference of purpose.
Chief Jones, whose expenses are deductible, can deduct not only the cost of the course, but also the travel expenses to the site of the course, any food and lodging bills incurred while away from home, cost of books, special equipment, etc. There are other aspects of these new regulations. Suppose Chief Jones travels to a city 500 miles from his home to take special training. While in that city he takes a side trip to another city for the purpose of sightseeing or visiting friends or relatives.
In this case his expenses to the city where the course is given are deductible, but the cost of the “side tour” is not. He must allocate the expense for meals and lodging to eliminate the personal portion.
Should the situation be changed— Chief Jones spends five weeks in the city’ where the course is given, but the course is only for one week, then the government will hold that the primary reason for the trip was for a vacation or other personal reason. Now the only deduction that can be taken is for meals and lodging for the oneweek period, and no deduction can be taken for the transportation costs.
These rules are retroactive to the years 1954, 1955, 1956, 1957, and apply from 1958 to date. Claims for refund can be filed by those who have incurred such expenses and who have not taken advantage of this change.
These regulations are of special importance to those fire chiefs or administrators who are required by the terms of their appointments to take courses in specialized fire fighting or fire prevention work. Thus, even if a promotion or pay increase results from the taking of specialized training, the expenses are deductible because they were required by the employer (municipality), and were for the retention of salary, status or employment itself.
Do you qualify for a deduction? If in doubt ask your tax accountant or lawyer to check on your particular set of facts and types of expenses incurred.
* Robert S. Green and Lillie Mae Green, 28 TC 135 (1957); Clark S. Marlor 27 TC 624 (1957), sustained on appeal in the 2nd Circuit, Marlor v. Commissioner.