With the April 15th deadline quickly approaching, code school graduates are often asking whether or not their bootcamp tuition is deductible on their tax returns. Please note, we are not tax professionals, and our best advice is to ask your CPA whether or not your tuition is deductible given your circumstances. That said, here is a summary of what we've found on a Federal level.
Because most coding boot camps are accredited on a state level, not federally, the answer is not as simple as it would be with tuition at, say, the University of Georgia. Read on for more, or check out IRS Publication 970 (Tax Benefits for Education) to go straight to the source.
Graphic credit: WeFinance.co
Summary and Examples
Tuition is deductible if your current salary, position, or employment will be adversly affected if you do not receive the training you paid for. That said, there are 2 conditions: a) if the training program qualifies you for a new skill, it is not deductible, and b) if the training is required to meet minimum education requirements for a job, it is not deductible. Basically, if the education is necessary to maintain the status quo, it may be deductible, but if you are learning a new trade (programming) or otherwise advancing your current position, it may not be deductible.
To provide a couple of examples:
- If you are a marketing manager, and your boss asks that you learn to code, it is not tax deductible because you are learning a completely new skill.
- If you are a developer contractor, and you learn Node.js to satisfy your clients' continual demands for the latest-and-greatest, tuition is deductible.
The above examples illustrate the common theme surrounding the government's position on the subject. If you're learning in order to maintain your current vocation and prevent outdated skills, your tuition is likely tax deductible, whether or not your employer required the training. If you're learning something completely new, like a lawyer switching gears towards software engineering (we see this fairly often), tuition is likely not deductible.
One other big caveat involves duration of time away from work during which the training takes place. For example, if you are a developer by trade, and then you take more than 1 year off to pursue your dream career in Hollywood, but it doesn't work out so you decide to reenter your old tech vocation via a bootcamp's retraining program, tuition is likely not deductible because you left the industry for more than one year.
As with any tax / financial decision, seek advice from a CPA if you're unsure whether or not your tuition qualifies for a deduction on your tax returns. If it does, it could mean some very real savings!