David still prevails over Goliath. Well, at least a determined nurse can against the Internal Revenue Service (IRS).
Representing herself, Maryland nurse, Lori Singleton-Clarke won a victory against the IRS, allowing her to take nearly a $15,000 tax deduction in business school tuition. This according to Laura Saunders of the Wall Street Journal (See Nurse Outduels IRS Over M.B.A Tuition).
The tax code has long provided for work-related tuition write-offs, but under limited circumstances. The education must maintain or improve skills above the minimum level required in a current trade or business, and it cannot lead to a new license or line of work. In Ms. Singleton-Clarke's case, her decision to pursue an M.B.A. was motivated by not wanting to "...feel outmatched by surgeons who didn't want to talk to me."
Her case began in 2006 when she deducted $14,837 of tuition from the University of Phoenix on her 2005 tax return. She was advised by her tax preparer that she met the stringent definition. What followed was a confusing round of correspondence from the IRS, followed by a meeting with an IRS agent.
"At one point I had three requests for the same records, each with a different contact name I had to spend hours calling to figure out who needed what," said Ms. Singleton-Clarke.
After the IRS denied her deduction once more, she went to trial. "There was me just me by myself at one table and the [IRS] tax team at another in a big courtroom." The team included two attorneys and several assistants.
Through detailed record-keeping, Ms. Singleton-Clarke won favor with Judge Stanley Goldberg who questioned her closely.
The tax court decision ruling should make it easier for many other professionals to deduct the expense of a M.B.A. in the future.
Good for you Ms. Singleton-Clarke.
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