Every good aspiring CPA has probably asked him or herself, are my CPA review course fees and expenses tax deductible? I will admit that I thought about this too when I was shelling out thousands of dollars to pay for my AICPA-approved CPA prep course.
Unfortunately, the IRS has ruled on several occasions that CPA review course costs are non-deductible because becoming a CPA is deemed to be starting a new trade or profession.
If you are like me, you are probably thinking there has to be some way to deduct these CPA exam application fees and costs. Maybe there’s a loophole or a different way to look at this. That’s a fair point.
Let’s take a look at why CPA review courses are not deductible on your personal income tax return. Keep in mind that I don’t practice in public accounting or do professional tax work anymore. This is just my opinion based on my research, self-study, and experience. Run this by your CPA if you have any questions.
That being said, let’s look at the different scenarios.
- 1.Becker CPA Review Course Endorsed by Big 4 Accounting Firms
- 2.Surgent CPA Prep Course Best Technology + Save $1,100
- 3.Gleim CPA Review Course Most Task-Based Simulations
- 4.Roger CPA Review Courses Best for Engaging Video Lectures
Can You Deduct CPA Review Expenses on Your Tax Return?
Basically, there are two different ways you can look at the cost of buying a CPA prep course. It can either be considered an educational expense or an unreimbursed business expense.
Furthermore, both of these options are treated differently for tax purposes and reported in different places on the Form 1040. Let’s take a look at each.
Can I Deduct CPA Exam Review Costs as an Educational Expense?
Typically, qualified educational expenses can be deducted as an adjustment to AGI on the first page of the 1040 form. This sound like it might work, right? CPA license and registration fees are the costs you incurred to educate yourself about the exam after all.
Well, the IRS defines education expenses a little differently. Here’s what they consider a qualified expense:
Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution.
Unfortunately, since your CPA study guide company is not an eligible educational institute and you don’t really have to “enroll” in one to take the course, this doesn’t cut it.
Therefore, you can’t deduct CPA prep course fees as educational expenses on your tax return.
Get Discounts On CPA Review Courses!
Save $1,100 off Surgent CPA Ultimate Pass!
Gleim CPA Premium Review Discount – Save $600
Save $310 – Fast Forward Academy CPA Discount
SAVE $165 On Yaeger CPA Review
Crush Exclusive: Save $200 off Universal CPA Review
Roger CPA Review Save $570 off Premier!
Roger CPA Review Save $300 off Premier!
Lambers CPE: 20% off 2-Year & 10% off 1-Year
Surgent EA Ultimate Pass Review Coupon Code – Save
Surgent EA Premier Pass Review Coupon Code – Save
$340 off Surgent CMA Ultimate Pass Review!
Gleim CMA Premium Review Discount – Save $160
Save 15% OFF PPI2PASS SE Review Material Discount Code
Save 15% OFF PPI2PASS PE Review Material Discount Code
Save 15% OFF PPI2PASS FE Review Material Discount Code
Save 25% OFF Aceable Agent Real Estate School
Save 30% off The CE Shop Real Estate
Save 20% OFF Prep Agent Real Estate Course!
10% Off AYPO Real Estate
10% OFF 360training Real Estate Pre-License and Exam Prep
10% goleansixsigma.com Discount (Black,Yellow,Green,White,Lean)
Save $725 off Surgent CPA Premier Pass!
Save $350 off Surgent CPA Essential Pass!
PM PrepCast CAPM Discount
$240 off Surgent CMA Review Premier Pass
$100 off Surgent CIA Review Course
Get 20% OFF CMA Exam Academy!
Save 50% on Grey Campus Self-Learning Courses
Save 10% on Grey Campus Live-Online and Live
The Agile PrepCast Elite for PMI-ACP Discount
Surgent EA Premier Pass Review Coupon Code – Save
Save $31 Gleim EA Review
Save $300 & Get 1-Year FREE Continuing Education of
Get 1-Year FREE Continuing Education of Enrolled Agent Review
Brain Sensei $25 OFF PMP Course!
Brain Sensei $17.50 OFF CAPM Course!
$50 off Exams PM Live Course
Save $50 off LSATMax Prep Course
Save $400 with LSATmax 10 hour Tutoring Package
Alpha Score LSAT Coupon Code
Princeton Review Ultimate LSAT Test Prep Promo Code –
Save $150 On Kaplan LSAT
$74 Off Sybex Platinum PMP Review Course!
10% OFF ExamsPM Offer (PMP or CAPM Certification)
Save 10% off Bar Prep Hero Bar Review Products!
Save 10% or up to $100 off Quimbee Bar
Princeton Review Ultimate GMAT Test Prep Promo Code –
Save up to $150 on Kaplan DAT
Take 10% OFF AdaptPrep CFA® Level 1, 2, and
Princeton Review CFA® Test Prep Promo Code – Save
$48 Off Gleim CIA Review Discount
Save 10% off Series Exam Prep at Securities Institute
Roger CPA Financing Offer
Got CPA Exam Questions? Get Answers!
Princeton Review Ultimate DAT Test Prep Promo Code –
(PMBOK)Project Management Certification. Save 30%
Save $50 OFF AdaptPrep CFA® Review
$200 Off Prep Expert SAT Courses!
$200 Off Prep Expert ACT Review Course!
20% off OnCourse Learning Continuing Education
20% off OnCourse Learning Mortgage Education
Can I Deduct CPA Review Course Fees as an Unreimbursed Business Expense on my Itemized Deductions?
Typically, the IRS allows you to deduct business expenses that you incurred to perform your job that was not reimbursed by your company. These are often called unreimbursed employee expenses.
For example, if your employer requires that you take a medical exam as part of your training and they don’t pay for it, you can deduct the cost of that on your Schedule A if you are able to itemize your deductions.
This sounds like a potential avenue that could work, doesn’t it? Well, there are several problems with this approach.
First, the IRS does not allow you to itemize an employee expense that trains or prepares you for a new trade, profession, or business. You might think, “Ah, I’m already an accountant. CPA exam prep isn’t a new trade.”
Unfortunately, the IRS deems it to be a new trade because Certified Public Accountants are able to legally do many more things than a non-certified accountant. (Glenn v. Commissioner 62 T.C. 270) Thus, you are deemed to be training for a new trade. Yeah, that’s annoying.
Second, according to Pub 970: Tax Benefits for Education, the IRS states that CPA study materials that are used to prepare for the CPA exam do not qualify as work-related study expenses or education. This is because they are materials to prepare you for the first time at a new trade or profession. Yes, it goes back to that point again.
Thus, these are deemed to not even be related to your current job, work, or profession because they are preparing you to leave your profession and start a new one as a CPA.
I know it sounds crazy, but that’s the US tax code for you. I’m sure this news is pretty disappointing to hear, but at least you are good company. Truthfully, every CPA candidate has had to learn the unfortunate news that they can’t claim CPA exam textbooks on their tax return at some point. Hence, consider it your first real look into the personal income tax code.
Don’t Spend a Ton on a CPA Exam Review Course. It’s not deductible!
This also reinforces the fact that you can’t pay too much for your CPA course. If you can’t even get a deduction for it, why would you want to overpay for one? Use these discounts to get $500+ off your course purchase.
If you haven’t decided on which course is right for you, use my comparison chart where I review each course and show you which one will work out best for your study style.