RN to CNP - Education Schedule A deductible

[flynfinn]

I have a client who is a RN working on her CNP credentials by attending additional classes. Is this an appropriate Schedule A education expense deduction?

[Bob McCoy]

Sounds like it is a job expense that would go on Form 2106 and then line 21 of Schedule A, subject to 2% of AGI. It also sounds like it meets the criteria for maintaining or improving skills in current work, provided CNP doesn't classify the taxpayer for a new profession. Doesn't seem like it would to me, but not 100% certain.

The Lifetime Learning Credit or Tuition and Fees Deduction are two alternatives. Without knowing your client' filing status, I don't know where her phase out ranges are, but for a single person they are between $54,000 and $64,000 for The Lifetime Learning Credit, and between $65,000 and $80,000 for The Tuition and Fees Deduction.

[FEDUKE404]

Likely training for a new profession

Sounds like it is a job expense that would go on Form 2106 and then line 21 of Schedule A, subject to 2% of AGI. It also sounds like it meets the criteria for maintaining or improving skills in current work, provided CNP doesn't classify the taxpayer for a new profession. Doesn't seem like it would to me, but not 100% certain.

The Lifetime Learning Credit or Tuition and Fees Deduction are two alternatives. Without knowing your client' filing status, I don't know where her phase out ranges are, but for a single person they are between $54,000 and $64,000 for The Lifetime Learning Credit, and between $65,000 and $80,000 for The Tuition and Fees Deduction.

That's usually the sticking point, and often you just have to choose up sides.

My limited understanding of what a Certified Nurse Practitioner is would lead me to think such training would NOT be eligible as a miscellaneous employee deduction (see below). But the door should definitely be open for some assistance with the Lifetime Learning Credit or the Tuition and Fees Deduction.

"A nurse practitioner (NP) is an advanced practice registered nurse who provides health care services similar to those of a physician. NPs may choose to specialize in family, pediatric or geriatric nursing. Common duties include diagnosing and treating illnesses and injuries, prescribing medications and educating patients. NPs may also order diagnostic tests and analyze the results."

FE

[Bob McCoy]

The definition from the IRS, is the education maintains or improves skills needed in your present work. An RN and CNP are both related to the medical field. A CNP is a step up from an RN just like a doctor is a step up from a CNP.

You might have to determine does a CNP perform some of the same or similar functions as an RN, plus some new and added skills. If that were the case it seems to fall within the IRS’S definition of a qualified expense. Sounds like you could make a pretty fair case to use this expense as an itemized deduction if that were the most advantageous route to take.

Another question to ask, is how far of a leap does the IRS allow? For example could you go from a nurses assistant to a doctor? That might be questionable, but just one step up from the previous profession doesn't seem like to far of a reach.

Not a lot of examples out there however, so might just have to go by interpretation. In this case to assume the expenses are legit, sounds like a reasonable interpretation.

[flynfinn]

The definition from the IRS, is the education maintains or improves skills needed in your present work. An RN and CNP are both related to the medical field. A CNP is a step up from an RN just like a doctor is a step up from a CNP.

You might have to determine does a CNP perform some of the same or similar functions as an RN, plus some new and added skills. If that were the case it seems to fall within the IRS’S definition of a qualified expense. Sounds like you could make a pretty fair case to use this expense as an itemized deduction if that were the most advantageous route to take.

Another question to ask, is how far of a leap does the IRS allow? For example could you go from a nurses assistant to a doctor? That might be questionable, but just one step up from the previous profession doesn't seem like to far of a reach.

Not a lot of examples out there however, so might just have to go by interpretation. In this case to assume the expenses are legit, sounds like a reasonable interpretation.

Thanks so much...I've found it to be a medium gray issue, I'm inclined to deduct on Schedule A subject to the 2%...

[Bob McCoy]

The medium grey issue comes up from time to time with the IRS rules given the fact they can't cite an example for every situation. Sometimes they just offer up a set of guidelines to go by, throwing around words like "in general" and "ordinary and necessary." Good luck with your client.

[Burke]

I would have no problem taking this. It is much the same as a teacher going for a Masters or PHD. Still same profession.

[New York Enrolled Agent]

The medium grey issue comes up from time to time with the IRS rules given the fact they can't cite an example for every situation. Sometimes they just offer up a set of guidelines to go by, throwing around words like "in general" and "ordinary and necessary." Good luck with your client.

A nurse practitioner has a set of skills that are different than a registered nurse. NPs can write RX scripts - RNs can not.

Maybe the Tax Court can give more guidance than "in general". You might want to read the cited case. I think it may offer some caution.

The Tax Court in Robinson 78 TC 550 ruled against deductions for an LPN becoming an RN. Here is the summary headnote:

Held, petitioner, a licensed practical nurse, may not deduct the costs of acquiring a 4-year degree from a school of nursing when such degree leads to her qualification as a registered nurse. Sec. 1.162-5(b)(3), Income Tax Regs.

[FEDUKE404]

Not allowable as employee education costs

A nurse practitioner has a set of skills that are different than a registered nurse. NPs can write RX scripts - RNs can not.

Maybe the Tax Court can give more guidance than "in general". You might want to read the cited case. I think it may offer some caution.

The Tax Court in Robinson 78 TC 550 ruled against deductions for an LPN becoming an RN. Here is the summary headnote:

Held, petitioner, a licensed practical nurse, may not deduct the costs of acquiring a 4-year degree from a school of nursing when such degree leads to her qualification as a registered nurse. Sec. 1.162-5(b)(3), Income Tax Regs.

While there is always a gray zone lurking, I tend to agree entirely with New York Enrolled Agent.

Many moons ago, the emphasis was that deductible education costs (within the constraints of "employee expenses") could only exist in scenarios where such education maintained or improved currently used job skills. Anything that would, in and of itself, train you (or, more importantly, qualify you) for a new type of work was not an allowable employee business deduction. A high school graduate could not deduct college costs. A clerk in a law office could not deduct law school costs. A very smart lawyer could not deduct medical school costs. The list goes on.

From my limited understanding of what becoming a nurse practitioner involves, and the previously cited information about the skills/professional abilities involved to become a nurse practitioner, I feel that training does NOT reinforce currently used job skills and DOES qualify her a new line of work. Thus, no employee deduction of the expenses on Schedule A.

Just my 2¢ worth. You're on your own!

FE

[flynfinn]

While there is always a gray zone lurking, I tend to agree entirely with New York Enrolled Agent.

Many moons ago, the emphasis was that deductible education costs (within the constraints of "employee expenses") could only exist in scenarios where such education maintained or improved currently used job skills. Anything that would, in and of itself, train you (or, more importantly, qualify you) for a new type of work was not an allowable employee business deduction. A high school graduate could not deduct college costs. A clerk in a law office could not deduct law school costs. A very smart lawyer could not deduct medical school costs. The list goes on.

From my limited understanding of what becoming a nurse practitioner involves, and the previously cited information about the skills/professional abilities involved to become a nurse practitioner, I feel that training does NOT reinforce currently used job skills and DOES qualify her a new line of work. Thus, no employee deduction of the expenses on Schedule A.

Just my 2¢ worth. You're on your own!

FE

Again, thanks to all who took the time to answer this, I really appreciate the opinions.