Thursday, March 26, 2009
Although it might seem at first to be a simple matter, the question of whether or not professional development classes and credentials are deductible is actually quite complicated.
Classes or workshops that you take to get ready to care for children are deductible, but classes or workshops that you are required to take by state law before you can get a state license are not deductible. So if you take a class on child development before you are licensed, it is deductible. However, if state law says that you have to have taken a class in child development before you can get licensed, then it's not deductible.
However, continuing education expenses are deductible even if required by licensing. If state law says you must take 10 hours of training a year after you get licensed, then the cost of classes you take before and after you are licensed are deductible.
Any training you receive after you meet your state's child care regulations is deductible as long as the training is related to your business. These training classes are deductible even if they don't qualify for training credit according to your local regulation requirements. In other words, if you take a class on record keeping that doesn't count towards your state training requirements, this class is still deductible.
- All costs associated with obtaining NAFCC accreditation or a CDA are always deductible. (...and I would be happy to help you with either!)
- Education expenses related to child development, taxes, CPR, parent communication, nutrition, or any other class to increase your skills to run your business are deductible.
- Classes offered by your local child care resource and referral agency are deductible.
- Classes in a second language are deductible only if you use this skill to build your business or if you teach the language to children.
So how about college? You cannot deduct the cost of classes you take to receive a post-secondary undergraduate degree if this is your first post-secondary degree. The reason you cannot deduct this is because the degree qualifies you for a new occupation. Such classes are not deductible even if the class helps you maintain or improve your skills as a provider.
If you take college classes that do not lead to a degree (a class on child development, for example), then they are deductible. If you already have a post-secondary degree and you are taking classes that qualify you for a second college degree (a degree in early childhood development or a masters degree in education, for example), then these classes are deductible.
Clear as mud, right? One last thing to remember... If you receive a grant or scholarship (TEACH, TAP grant, etc.) to take training classes or attend business conferences, the money you receive is taxable income and needs to be declared as such. But you can also deduct the cost of the conference or classes that you take. If the grant does not cover the full cost of the training, you can still deduct the full cost. If you never actually receive the scholarship (the granting organization pays for the training directly), you should still report this as income and claim the cost of the training as an expense.
I obviously encourage training. There are numerous benefits of professional development in the family child care field. To the provider, it offers knowledge and skills that can enhance and enrich her career. To the child in care. it can mean a better educational environment when the provider is able to transmit the knowledge she has learned. To the parents of children in care, it can be a strong indicator of quality care. Such indicators will likely grow in importance as parents look for objective standards to help them select a caregiver for their child.
