I want to setup my business to pay for my schooling. My regular job gives tuition reimbursement, and when my real-estate is going well enough, I’m going to want it to cover that. I’m taking Business Management classes, so its not something out of the norm. How do I got about setting up an S-corp/LLC to pay for my schooling?
Dean
I prefer a c-corp when using benefits programs. You need to establish a policy and confer with a benefits-knowledgeable CPA to make sure the program complies with tax law.
Ok, that makes sense. Now, I could always just take it as an education expense on my personal 1040. That may be easier this year since I’m still W-2 employeed with my regular 8-5 job. Can you deduct education expenses on an S-corp as easily as on a personal 1040? Thanks.
Dean
I don’t do s-corps. I have to yield to mcwagner on that one.
If you have educational expenses related to your real estate business you should be able to deduct that on your 1040.
I deduct Spanish tapes, classes, books, etc. because I NEED and use it every day in the business. I have a long-time dream of going to Guadalajara for an intensive live-in language course. I will write the whole thing off as needed for business. Anyone see any red flags with that?
Furnishedowner
I like running them through corps because the money is tax free to employees and tax deductible to the employer. It is a way to take money out of the business without paying taxes. In fact, the payment reduces taxes. Get your deductions off the 1040.
education expenses are deductible irrespective of the entity type.
However, if you’re in a degree program you might be careful deducting the education costs on a Sch C (or E). Depending on your specific circumstances, you may be better off to take the credits (dollar for dollar tax offset as opposed to just reducing taxable income). I could see that IRS might question the costs on Sch C, especially if you are in a degree program. More so if the costs are Harvard vs community college.
If you have an entity, use it. However, I would not suggest forming an entity just to get this benefit. That’s not a valid reason to have a business.
The schooling I’m doing is officially called BS in Business Management - Emphasis in Entrepreneurship. I would think that would qualify perfectly, especially for my beginning business. However, it does look like it will be easier, this year, to just pick it up on my personal 1040 as opposed to having to setup the structure for tuition reimbursement through my S-corp. I probably will set it up for my S-corp in the next year or two to come.
Dean