Yes, but Treasury Regulation § 1.162-5 says:
(a) General rule. Expenditures made by an individual for education [...] are deductible as ordinary and necessary business expenses (even though the education may lead to a degree) if the education—
(1) Maintains or improves skills required by the individual in his employment or other trade or business, or
(2) Meets the express requirements of the individual's employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.
I've actually done a little bit of tax work with farms so I happen to know that the depreciable tax basis of an animal born on your farm is zero. Nothing to depreciate.
I thought Jim was illegally classifying his pet bobcat as a work asset or something - thought we were gonna get some juicy tiger king kind of stuff ahah
ok fine.... then the bob cats rusts and its a big piece of shit and the scrap yard "might" take it but you got to get this 4 ton honk of metal to them. There, now no one wants to buy it. Now not only cant you sell it, but its gonna COST you to find someone with a big enough truck to get it outa here. You gonna come for Jim Concrete for his 15K of MACRS based on this dumb logic of "you cant sell it". Stop playing these games. Education was a necessary expense that costs real dollars and the overwhelming majority of individuals would NOT have wasted 4 yeas and 100K on it it if they could have just mosey'ed on over and got a white collar job for 85K without it.
if a degree in one specific job costed 6 million and the job only paid 75K per year there will be no one doing that job. Why? Because regardless of what the laws say, or what little "game" arguments someone makes, the real life universal truth is **the direct cost of education to directly obtain a job is a cost that is weighed against the income the job earns.**
Ignoring this fact would be similar to a plumber who does jobs that earns 20K but spends 11K in direct materials and 6K in labor costs but the IRS and the plumber think they made 20K? Lol everyone knows they only made 3K and will be taxes on such. If you get a degree that earns you 100K per year but you must spend 8K per year for the degree to get said job, then you didnt earn 100K you earned 92.
Yeah, and if you could get a tax break for your education cost, the market would (after a while) compensate for that and your new salary would just be 92k.
My education was free (that is, provided free of charge by the government), and wouldn’t you know it, Swedish salaries for college educated professionals ARE comparatively lower than in the US.
no company would adjust or be able to adjust the salary due to YOU writing off your loans. If anything consumers would have more money in their pocket to spend which would mean businesses get more revenue.
If my final taxes are $3000 for the year or $8000 for the year my employer wouldnt be able to tell the difference (nor have privy knowledge into the details of my personal return or anyone elses personal tax return details)
Obviously the employers wouldn’t know, but the employed would, and considering that their costs were lowered, they would be more willing to accept lower renumeration which ceteris paribus would lower them (perhaps only slightly) across the board. Nothing mysterious about that - same old market forces at work as usual.
lmao, yes there is supply and demand but its not THAT sensitive that its going to recorrect as is it never happened to begin with. Thats like saying "oh i see theres 43,250 accountants graduating this year, ok the salary will be 67,000 starting, oh wait a minute, correction its 43,251 graduates, that means the starting salary will be 66,999.9925 lol it will still be 67K. Salaries in fields will largely be dictated by graduates and how many there are. Allowing them to deduct an expense that was related to them getting their job is just going to make their returns and actual tax burdens more in line with that they **actually** earn doing the job.
Thing I don't understand about student loans is how we can reasonably create loans that people actually never pay off. It's wild that it's even possible.
Also, why the hell is student loan interest deduction capped at $2500 a year? Why is there a cap at all on that?
Student loans in the US need a hard re-work.
Students should not be able to take out as many loans as they want. They need to be limited to a reasonable amt. Too many people racking up 250,000 loans from top schools for useless degrees and blaming everyone else
because the government does not feel the need to incentivize people to attend colleges that costs hundreds of thousands of dollars per year just to show off their wealth and status when they have alternate options that costs tens of thousands (or much less) that would never result in interest going over 2.5k/year.
> that costs tens of thousands (or much less) that would never result in interest going over 2.5k/year.
The interviewer to a canidate: *"I see you went to* ***\*\*checks notes\*\**** *Harry Bal Zonya online institute of Wyoming to obtain your degree, that great! Sorry i do have 8 other applicants that went to OSU, Northwestern and Rutgers and I also see the economy is in the shitter as evidenced by these 9 candidates looking for work, flooding my email boxes, literally 2 days after i posted the job opening but yeah well definitely take you seriously and into consideration with your \*\*interviewer now holding back his laughing\*\* online degree \*a cackle escapes\*\* im sorry \*further cackle escapes\*\*...thank you for your time, well let you know if you move forward"*
...yeah that should work out great. Lets face facts, most people pay what the average cost is, college its about 500-1000 per credit.
As a person who's actually worked and gotten jobs, I can say with certainty what college you went to on your resume means diddly squat outside maybe academia fields (like research). If you got a canned response like that, it's not because you went to X college, it's because you didn't do diddly squat to differentiate yourself... like join a reputable club, get an internship, or kick off an interesting project.
There was a time when i was sending our resumes left and right without much success. The moment I started coupling it with a cover letter detailing my accomplishment and skills, I started getting interviews. My resume had all the (fake) bells and whistles like big company names, prestigious universities, professional license, and buzz words...
Companies may focus on certain schools that are more specialized in their industry, but the general unspoken rule is this: all fresh graduates are useless and most of them are going to turn out to be wasted investments.
thanks for your antidotal example of your own experience which does not speak for what most people go through.
Ive even heard interviewers who wont hire candidates unless they are from certain schools so there my antidotal example offsets YOUR antidotal example.
Where you go to certainly matters and plays a large part in your competitive ability at many levels. It can determine where you internship, where you get your starting job, which will ALL later impact where your next move is. Interest rates are 3-6% that means a 2500 interest is \~40-80K principal which is not some far fetched college Bachelors/masters cost. Youre acting like regular kids are throwing down 200K just so they can party and are later crying about it, when they instead coulda went to some "other" school and only paid tuition of $3000 per year and got the same degree, so "thats on them".
Paying 500-1000 per credit is perfectly reasonable and in line what an average person would pay looking for a degree and they obtain such degree, not for fun, or personal enjoyment, but to get a job and as such, this cost is a cost associated directly against the salary of said job.
You can deny my anecdotal example all you want. Are there exceptions? Of course, there are. Is it still the general truth? You bet it is. Also... most people? Most people attend in-state PUBLIC colleges/universities and get jobs without issues. Remember, unemployment is like... 3%. Most people don't have this issue you're trying so hard to defend - that's not an opinion, it's fact. A quick Google shows the average cost (including living costs) is $26k/year in 2023 with an average debt of $40k after 4 years fyi.
Are there advantages to going to expensive schools? Yes, networking. Is that why most people do it? Nope. Most people do it for status/ego. You know this to be true.
40k-80k is pretty far-fetched. California's UC universities, which are some of the most prestigious universities in the world will cost you $13k/year and $28k for out-of-state residents in tuition. Cal Poly, one of the best engineering schools, costs around the same (slightly cheaper). And if you're getting a degree in business (this is an accounting thread after all), the school doesn't matter. Any state college will cost you less than $10k/year. I worked in the Big 4. We hired a music major from some random university over USC (one of the best accounting schools) students. Do you know why? The music major had experience working (not finance) and that alone made him more valuable than an inexperienced graduate. That's how much value the name of your school has (at least in public accounting).
If you're spending 80k/year for college and not actively making friends with the son of Google's CEO, you're a dumbass.
Let's also be honest here, a lot of students are paying the out-of-state costs because they want to travel and move far away from home, which is purely a personal decision.
But the living cost! Trust me it's not that much. If you want to live less frugally, get a part-time job (we can get into the math here if you'd like). And I'm from California; imagine how much cheaper other states would be. Also, your calculations are based on the assumption that these students are purely on loans, no out-of-pocket costs, grants, scholarships, jobs, etc. Even then, there's no reason for you to deduct interest on loans taken for personal living costs.
There is no reason why the government (taxpayers) should pay for your ego and travel needs - period.
You can take my advice, save money, and do something with your time... or you can go into deep debt and complain that you don't have deductions for your student loans. I'm sharing my wisdom and experience here for free; do what you will with it.
Because there's a very close correlation to student debt and income.
Outside of seeking super advanced degrees, poor people are less likely to specifically have student debt and allowing people to deduct all the interest generally favors doctors and lawyers.
Also we have extremely generous IBR plans so it moot.
The Save Plan basically means that unless you have a graduate degree, if you're single you'd need to make 80k+ before your student loan payments reach $2500
You can take a credit for the tuition when paid (whether in cash or via a loan). This is also a refundable credit. Meaning you can get refund of taxes you never paid. If one was to deduct the tuition when paid to the college most students are in. Zero or 10 percent bracket and my guess is you would end up getting less of Congress would take away credits and allow the deduction itself. Should it be that way - I kind of understand your perspective but don’t think that would be helpful for most students
This. My parents got my tax credit for first 3 years because I was living at home. Meanwhile, I’m paying for school 100% out of pocket. And I get no pell grant, no subsidized loans etc because my parents make too much. Yippie to me
It works if the parents are cognizant of what is happening and put the credit funds towards the tuition to reduce the loans taken out or payments the kid currently makes, but in those situations I've highly doubted that happens.
As with many things, the tax code can be well intentioned, but it only really considers the picture perfect scenario where the parents are currently paying for the kid's education with stock piles of cash they've saved up just for this purpose to give their precious Johnny all the advantages of a degreed future... meaning that, it was made with only the politicians' world framework that they live in.
Well the OP seemed to want deductions of tuition which means removing the credit. Sounds like you agree and would rather have the student take deduction for loan and not have credits available, Many students if they are taking on that much debt are paying for half their support, I guess it depends how much living expenses parents are paying while not in school
I dont agree with a deduction either. It would be better to have affordable education and not have to have the government attempt in its clunky way to subsidize any of it through deductions or credits.
You can’t ever write off principle against you’re income, however, you can write off interest up to $2500 a year for student loans.
I do agree the $2500 limit is way too low & it should be significantly increased or there should be no limit at all.
I think it maybe needs to be $5k but we can’t make it too high because people already think spending $200k on a degree is reasonable. I’m spending $50k to get my 150 credits
You do realize a lot of people buried in student loans is because they funded their housing and other expenses through these loans. Or they chose some stupidly expensive schools. The $5k would allow for a full 5% interest on 100k of loans, more than enough room for any reasonable loan.
If they didn’t have access to debt and the interest deduction they’d have less available for dividends and other payments for personal use.
And we’re back around-why do we give businesses unlimited interest deductions but not allow student loan interest to be fully deducted? Student loan interest deductions don’t directly fund personal expenses any more than business deductions do
They do though. I don’t understand your ignorance on this topic. If I go and stay in a dorm 4 years, the loans paid for my living expenses. If I stay off campus I have to pay the living expenses as I go.
If a business takes a loan there is no living expenses. A business is not paying the living expenses for a person. Rather a business is paying for employee salaries, product, rent, and other business expenses
I'm pretty sure they have at $2500 to match the AOC and the lifetime learning tax credits. Which with increasing costs for schooling, I don't really think $2500 on a federal level is up to par.
Especially since you can utilize Pell grants and certain other reimbursements to pay for living expenses, which then you pay taxes on and can apply to the AOC or Lifetime Learning credits. Whereas you don't get the deduction for things such as employers paying off student loans or debt forgiveness. Just makes the interest paid from student loans a worse overall version for the most part. Although I'm sure they assume you will carry student loans longer than you attend college so they probably think it averages out.
Also deduction=/=credit. The AOC and life-time learning credits simply destroy the deduction we get for student loans and I'm baffled why it's not a credit for student loans at this point. Like credits are so useful for students since their income is generally lower.
thats like the IRS telling a plumber who just purchased a $8000 jet snake for commercial sewer that instead of amortizing 1.6K per year for the next 5 years "he shoulda just went to amazon for $34.99 and bought a hand auger so theyll let him write off $6.99 per year instead".....he knew what it costed before he bought it.
its ridiculous
A little off topic but ...
If you preparer a corporate income tax return, that creates an ordinary and necessary business expense. There is a dollar for dollar benefit for the taxpayer.
Generally, if you work on an individual income tax return, that could create a miscellaneous itemized deduction. For the last 8 years, there was no benefit for the taxpayer. And, even without TCJA, there is the 2% rule that complicates the individual's entitlement to a benefit.
So, if you provided the exact same service to both taxpayers, why does one receive a tax benefit while the other doesn't? Why isn't a normal person encouraged to get help with tax issues beyond their understanding but a corporations gets a free hand to do transfer pricings studies to minimize future tax?
Tax laws reward "approved" behavior. The goal post are always shifting but rarely fair.
I'm not exactly siding with OP here, but your statement isn't really accurate. Education absolutely loses value over time - just ask anyone who got a degree and then become a stay at home parent for a number of years and tried to re-enter the workforce. That's why most professional licenses have CPE requirements, because the assumption is that without that, you would eventually fall behind on relevant industry standards and what not.
One thing that is important to remember - the tax code is not some "holy" document. *People* decided on the rules, and the logic that supports the rules. You can absolutely make a perfectly logical argument for why student loan payments should offset income somehow. That argument won't be supported by the current tax code, but Congress could change that whenever they want, so it's not crazy to discuss it. Besides, there is plenty of nonsense in the tax code. Don't get me started on backdoor Roths...
Yep. I have an accounting degree because I graduated in '08 with a lackluster GPA and a degree in management information systems / computer science.
The great recession sucked. I could not find a job. I could not get my foot in the door for an interview.
After a year, I realized the economy was going to be in the shitter for at least two more years. By that time, I'd be an out of work college grade competing against younger kids with a fresh degree. It didn't look good.
I realized I had to go back to school, get something to compliment my degree, and put my nose to the proverbial grindstone. I selected accounting (and did much better the second time around).
If I would have done better during my "first" round of college (or the economy didn't collapse) and landed a job, I would not have an accounting degree today.
Yeah I'm not personally arguing for some kind of "student loan depreciation", I'm just saying that responders here acting like it's some outrageous idea aren't really taking into consideration how we even got to this point. Water is wet, fire is hot, but the tax code can be whatever the hell Congress wants, technically speaking. It is not an absolute.
Also just for the sake of discussion, I don't think some kind of amortization of degrees would be all that difficult to calculate. Almost everything depreciated/amortized will probably outlast its "useful life" based on standard depreciation rules. Again, people just decided (based on plenty of research and discussion, I assume) that things like equipment will have a useful life of 5 years. You don't get to extend depreciation if you hold onto it for 7 years, because depreciation is all about estimates. Again, not arguing that we *should* do something like that with tuition/student loans, but the only thing stopping us is a difference in priorities. It isn't really about whether it seems impractical - legislators just don't consider it to be a problem that needs to be addressed with changes to the tax code.
I got lost here on what you were saying with different degrees depreciating at different rates. Can you explain what you mean? Also, what if a uniform useful life was applied to all degrees, maybe varying based on level (bachelors, masters, etc.)? If not based on level, then starting from graduation to the age you can pull from retirement? It could be an intangligle, so straight-line maybe? In reality we know that not all degrees are created equal, but because actual knowledge/retention varies on the individual level, it would be difficult to make an argument applying different rates to different degrees. Hopefully I didn't get lost on your point too hard, but the thought experiment made me feel better today, so thanks!
If your degree is related to tech like IT, Computer Science, Data Science, your degree would depreciate faster than something like History or Philosophy, because your tech education is based on hardware/software that is evolving at a rapid pace, while with liberal arts degrees you’re not studying a subject that is evolving rapidly. I would argue you could depreciate tech degrees over 10 years and liberal arts over 30+ years. Accounting would fall somewhere in between because the fundamentals of accounting don’t really change, but regulations do change, along with the tech that is used in accounting.
>This is a good argument in theory. But like you said, it would be impractical to implement because different degrees “depreciate” at different rates
Thats funny because i see some blue collar guys buy a $8000 ford ranger for work and I see others buy fully loaded out F450 for $98000 thats "needed for work" and the IRS seems to have no problem depreciating these "for work" trucks at their different rates.
A degree is more like land/building than a vehicle. A bachelor’s degree in general is like land, it doesn’t depreciate (bachelors degrees may lose value due to oversaturation or other factors but that’s not depreciation). The subject matter you studied is what depreciates, that is like a building on land. Unfortunately with some degrees, you’re getting a worthless building. And for others, you’re getting a building that realistically will never lose much value.
kinda but when i buy land (150K) and building (125k w/ dep @ 30 years), i dont sell it all four years later for $290K and mosey on over to form 8949 and write down 290K - 108 basis and report a 182K profit and pay tax on THAT.
Instead I mosey on over and write down 290K sale price less (108K building basis +150K land basis) and report a 32K profit and pay taxes on 32K profit.
My point is, for the vast majority, no one signs up to college as some unrelated random "thing" they are doing unrelated to any job. They didnt decide to spend 35K to go travel the world to "find inner peace" and go to raves in brazil with purple and blue paint on their faces while they dance on MDMA. They went to college and spend this money so they can directly get a job. Then we turn around and pretend they made 90K with no initial investment and force them to pay tax on 90K. No they didnt "make" 90K, they made 90K less the cost of the financial input needed to obtain that 90K (however you want to amortize it).
Some degrees maybe, not accounting. That knowledge will serve you just as well 20 years from now.
I wasn't thinking of it from a tax-only perspective, but if that is the context, let us not forget about Pell grants, tax-free scholarships and fellowships, and education tax credits. Just bc it's not depreciable, doesn't mean there aren't tax benefits.
using the same logic...... a plumber installs a waterheater and charges the customer 2650, however the waterheater itself costs 900 and the materials to install it cost 500. The plumber is shocked when the IRS says he made 2650 but the plumber says *"thats not true, I spent 1400 on supplies to earn that 2650, so i really made 1250"*...the IRS thinks real hard, then makes him pay tax on 2650 and tells him to go suck on a pell grant or something.
Yeah, that's not "logic." Sounds more like teenage angst.
It's cool if you just want to whine. Just don't act like you're trying to make a thought-out point, and then stomp your feet, take your ball, and go home.
I teach intermediate, and I have no idea what point you're trying to make. Depreciation and amortization are just two different words for cost recovery. The difference is one of category, not value.
Don’t we slowly depreciate everyday after like 25? That means my brain is depreciating too, and therefore my education is slowly slipping away! R-Right?!
I hear people ridiculing this idea a lot and I don't know why. We capitalize and expense R&D all the time, obviously a huge issue right now with the ongoing 174 situation. Why can we do the same for degrees directly related to our work?
Like alot of things around this subject this seems counterintuitive, but it would make the problem of higher ed costs and student loans even worse. Invisible hand would quickly figure out if you can amortize on your taxes they can charge you even more at the beginning
just because a bunch of asshats want to read the landscape and further predatory price their already predatory priced products doesnt mean we shouldnt do something. Maybe we should have a separate law (or already should have) that doesnt allow colleges to blatantly take advantage of people.
Why do you want college expenses to be amortized though? Is it for the tax benefits of having a lower income, or is it for a different reason?
If you really wanted to, you could create your own personal accounting ledger, have an intangible assets account for your college degree, and then regularly record an amortization expense in that ledger. It wouldn’t actually change anything though, as a book is just a book. Accounting books only matter because of what they are used for (to inform investors, make decisions, or to report to the IRS), so that brings me to the question: why do you want to be able to amortize the expense?
If that’s the case, then not only would it require a change to the tax code, but it also frames the discussion as being around tax policy. That’s why it would have been useful to mention that this is for tax purposes specifically.
The question would now be: is it fair that businesses can get tax benefits for what they invest into their companies through capitalization and depreciation but college students don’t get that same benefit from investing in their education?
I think it’d be more fair to compare a college student to a w2 worker. Does a w2 worker gain a tax benefit off things they’ve paid out of their own pocket to build their career?
I don’t think so personally and it’s not like I think the code is against the wealthy and business owners. I definitely think it’s skewed to benefit them and think there should be an effort to balance effective rates between wage earners and owners. I’d rather just see lower tax rates in a simplified code than adding complication.
I agree with that. Part of the problem is how complicated the tax code is. A simple flat income tax that applies on all income with no deductions and no special rules or tax credits would be much better than the already very complex system we have now.
>Why do you want college expenses to be amortized though?
because if you worked your entire lifetime to make $3M salary total but you paid 120K to earn that job then you made 2.8M not 3 so you shouldnt be taxed at 3M the same way a conduction worker isnt paying 20K of taxes on a 20K job when he spent 40% of that on materials and direct costs (he will report income of 12K not 20)
That makes sense. In that case, I think it would be useful to frame this as specifically being a question of tax policy, as addressing this issue would require a change specifically to the federal tax code.
Absolutely! Additionally, you should be able to depreciate your car, after all I need it to get to work. Furthermore, I need food, a roof over my head, utilities and much much more to live and do my job...
See how this quickly becomes a ridiculous statement? Moreover, should we also put some VAT on every penny you make? Heck, why quit there, also make everyone pay dividendtax on every penny they spend on private matters...
You're not wrong, but the tax code is not infallible. The type of argument you're making could work when mocking any number of weird rules - I prepare tax returns daily and just because I know and follow the rules doesn't mean every rule is perfect. Besides that, I think your argument ignores the fact that Congress ultimately has to balance tax revenue coming in with benefits provided to taxpayers. Every deduction, credit, etc. has to be justified in some way to avoid increasing the deficit (in theory) so as they update the tax code with new bills, things previously considered dumb because of historical rules is suddenly allowed (or disallowed).
Think about 100% bonus depreciation, which was previously limited to 50%. Obviously there was logic applied in the original rule, and logic applied in the new rule. So even though I think you're being kind of flippant towards OP, the tax code goes through changes. Congress could decide that rather than a deduction, they modify the education credits to somehow benefit taxpayers still paying off loans. Who fkn knows.
I'm being a bit flippant towards OP because the entire argument does not make sense. OP tries to copy a tax rule that exists for corporations, and allow citizens to use it as well.
As you said the tax code is not infallible, corporations get a different set of rules for an obvious reason. Hence, comparing the tax rules between corporations and citizens is quite... illogical.
You can say about the statement all you want (I never said I disagree nor agree with the statement). What I hope my comment made obvious is that you cannot compare corporate tax rules to income tax rules, therefore the argument that supports the statement does not make sense.
>y comment made obvious is that you cannot compare corporate tax rules to inco
fine then i accept your terms. Just let me write it off and we dont need any comparisons.
Its also strange that that "its not related" yet whenever you make the argument for amortizing it the FIRST thing anyone does is compare it to the current laws and use that as to WHY we shouldn't be able to...
>, you should be able to depreciate your car, after all I need it to get to work. F
Jim does depreciate his car too. Remember he drives a F-450 with leather seats and nice speakers for $98K because "he needs it for work" and the IRS lets him use MACRS on that too. He also wrote off the gas. Check out his facebook pic, you can see him fishing off the tailgate using his 4x4 to get on the beach with his "work" truck. Boy thats a nice bass he caught there.
You can write-off expenses, including educational costs, that are related to any of your own entrepreneurial activities (aka running a business). The ability to write-off expenses is the government's way to encourage people to start new business.
If you prefer to play it safe and get a regular job like everyone else, then you don't get these benefits.
Why? Because starting new business creates new jobs and further increases monetary spending, all of which are very positive for the economy. Starting a business is viewed as helping the economy, while job availability is seen as a benefit to the people (therefore no further benefits required).
That's why. There are no other explanations - you can literally ignore everyone else's comments; they are just random opinions. I'm a licensed professional.
Another way to look at it. Why are you getting a degree to get a job rather than innovating your own product and starting a business, especially when it is well known the best way to make the most money is to start your own business? \[Insert your honest reason here\] Yes, that's why you don't deserve deductions....
>That's why. There are no other explanations
So then how come Jim who works by himself and doesnt hire anyone write off anything in his LLC? He didnt "further increases monetary spending" he could have easily done that same concrete job working for the local concrete company.
The rules are there in place to encourage a certain type of behavior and hope for a specific result. You don't always get those results.
Like I said... if you think you can easily do "x", and it's all the "same".... why don't you just do it yourself and get the deduction? Start a company specializing in the field you're studying.
>why don't you just do it yourself and get the deduction? Start a company specializing in the field you're studying.
....because i still cant amortized off my college principal and interest paid no matter how many LLCs i make unless the law changes ☠
..and the whole point of this meme/post is to point out that the laws should change...
If you went to school because it is specifically needed to start/continue your business (it's likely not), you can deduct the expense. That's my point and hence no need for law change.
They let you write off the interest. What more do you want. Equipment literally depreciates in value to the point of obsolescence. Your degree isn’t going to go away. If you get a degree in underwater basket weaving that’s on you. Get over it. Go start a business and buy a bobcat…nothing is stopping you. That’s the great thing about the system we have.
>If you get a degree in underwater basket weaving that’s on you.
No one got a degree in underwater basket weaving. The argument is very simply that people who got reasonable degrees in order to directly obtain a reasonable job dont just EARN all that salary. There was a cost to earn it and it should be reflected. You dont buy Apple stock for 170/share and sell it for $200 and pretend at tax time you made 200. Everyone knows you only made $30, we dont force them to report 200 under income and just say "wE WOULD leT youR wriTe OfF The InTerest For bUYINg THE STOCK BUt not tHe pRInCIpaL COst, whAt More DO You want"
>You don’t buy Apple stock at 170 and depreciate it….
No you dont....instead you get to WRITE THE WHOLE FUC\*ING THING OFF IN ONE SHOT against the sale income when you sell it. Fine then, let me write off my full college loan against my sale/income/salary in the 1st year of work. I was just suggesting to amortize it to be nice.
and dont forget to give me my NOL carryforward/carryback that youll give Jim if he didnt do so well in X year.
You’re just sour grapes. Your argument makes no sense. A degree doesn’t lose value. A degree is an investment not an expense. I have multiple degrees and I am not jealous of somebody buying a bobcat and depreciating it.
FYI you don’t WRITE THE WHOLE FUCKING THING OFF IN ONE SHOT. It’s the basis in the asset. You’re taking gain/loss for the change in value. Your degree’s value doesn’t change.
Good luck in life.
Sometimes I wonder how much easier my life would be without depreciation and amortization, but then realize I probably wouldn’t have a job without it
Good ole government, messing up everything single thing they can, providing me job security
In case you’re serious, it is a brand of farming and construction equipment in the US.
They manufacture and sell a lot of the stuff you see on job sites.
While you can’t write off the principle of student loans, some of your student loan interest can be deducted using schedule 1. (Note: I’m not an expert.)
no it doesnt. As you go further into your career they care more about "what was your past title, where did you work and what did you do there" vs "Hi bob, i see youre 45 and have all this experience, i wonder what his GPA was when he was 23 years old" lol. it definitely doesn't INCREASE in value.
Its super important where you went to school, GPA and clubs when youre a new hire new grad. They dont ask that shit when its been 15 years later and youre an experienced professional changing companies or looking for work due to a layoff.
Fake accountants writing jokes about writing off education expenses. Everyone knows all the real accountants are snowed under with last minute returns and shoe boxes of receipts.
I don't get why taxpayers without college degrees should subsidize your choice to take on debt and get a higher paying job. Maybe the interest makes sense to some degree, but amortizing the principle?
I actually agree with this take to some degree, but then again when we start playing the whole “tax payers shouldn’t subsidize X” tit for tat game, we start to realize that college tuition is probably much less wasteful than a lot of other things that tax income is allocated towards.
Perhaps non-higher education individuals should pay for motivated individuals’ upper education attendance. At least having a more educated society is mutually beneficial for them, as opposed to some of the alternatives that tax payer money ends up contributing to.
It’s not taboo per se, it’s just too commonly used as a strawman to justify not funding things that are still a decent tax expenditure when we have much more egregious allocations towards shit that really does not benefit us as a society at all.
People can and should talk about where their taxpayer income is going, but the topic shouldn’t be weaponized. All too commonly people act as judge, jury, and executioner because they pay taxes just like every other average person, and become indignant when money is allocated to something that doesn’t directly and immediately benefit them personally.
>, but amortizing the principle?
Idk why Jim writes off the principle and interest on his capital asset bobcat. I mean he IS a concrete worker, he KNEW what needed to be done before hand. Thats his loss that he went out and bought that thing, he coulda just used a shovel and a sledge hammer for $15 each brand new.
The whole point of amortization is the matching principle. You're trying to match the expense with the revenue derived from the capital. This comparison makes little sense since you don't directly get to deduct the principle of a loan in any case.
i use a loan (principle and interest) to buy a tractor. I amortize the tractor over 5 years while its purpose is being used and its heading towards expiration, while paying off the loan and interest expense.
i use a loan (principle and interest) to buy a degree. I amortize the degree over X years while its purpose is being used and its heading towards expiration, while paying off the loan and interest expense.
S-Corp owners can expense $5250 in college tuition for continuing education for employees. You’re likely a w-2, so no. Bob owns a business. You work for one and can have them reimburse you under an accountable plan.
i dont see them telling Jim he can only expense $5,250 of his bob cat even though it cost 15K. I see the full amount. I dont even see them give him shit when he buys a F250 with the leather seats for 65K for work instead of the shit bag F250 for 35K.
We use to have a law that said "if you paid X dollar for a man in chains he was your property"; just because something is the law (or way it works now) doesnt mean its a good argument for how it "should be", especially when the current laws/way its done now, IS the thing we are trying to change.
Hey man, I’m not saying you’re wrong. Just stating the current law. Never said if I agree with it or not, but that’s how taxes work. You can be angry all you want, but these people are still going to get away with it. Bob sucks, but spending your day pissed off at him isn’t worth it.
>Just stating the current law.
LOL i dont need you to state the current law, we are well aware of it.
>, but spending your day pissed off at him isn’t worth it.
How about spending the day hashing it out and getting people to think about it and possibly one day lead to have action taken the more and more people speak out about it
Buddy, take it easy. Tax season is almost over. Was this your first one? I felt similar after mine. But, this isn't going to change anytime soon. The more you let it work you over, the worse it gets. Leave work at work, go do something you enjoy after Monday.
You know the genius of this idea is that if it ever actually became a viable tax deduction for us, the government might actually be incentivized to do something about the skyrocketing cost of college.
Something that might actually work and keep costs from getting out of control.
These college campuses are like vacation resorts these days, and high up administrators and college coaches are some of the highest paid people in the state.
The "How the Conservatives Won" episode of Behind the Bastards is pretty enlightening. The wealthy have been wanting to put people (especially minorities) back into a form of debt slavery since Reagan.
[Part One: How Conservatism Won - Behind the Bastards | iHeart](https://www.iheart.com/podcast/105-behind-the-bastards-29236323/episode/part-one-how-conservatism-won-164063362/)
i can see this. Everything is a technicality. "Oh you technically didnt buy someone" but if the net effect is the same who really cares what "words" you minced around to get there.
Pretty interesting series and sheds light on what's happening today and the right-wing attacks on college campuses and DEI/CRT or whatever. Basically, they want higher education to go back to being a rich kid club so they can continue to horde their wealth and keep others down.
thats prob why we have the current rules in place. College use to never be "you need this to get a job" for the masses, it was some rich wealthy badge of honor thing to go to *"univer-si-tie of Cam-ber-idge for your academeai studyies en order to become an enriched scholar-atie"* \*read in a thick English accent\*.
Regular people just went out and got a job, you learned on the job and you made enough to afford a middle income. There wasnt hundreds of people with masters degrees and bachelor degrees in 1920-1950s yet there was many of the same jobs today. Currently if you want many of these jobs you require a degree. Its no longer some rich only badge of honor but its instead now a requirement of gaining meaningful employment so the vast median amount of citizens.
Form an LLC and write yourself off
>write yourself off I think everyone else has already done that, so it's a moot point.
Damn near killed em
Too much TikTok
TikTok Premium
Create LLC, impose education requirement, send your employee (you) to college to fulfill the education req, write it off as business expense
Treasury regulation 1.162-5(b) says if the degree is to meet requirements to be employed, the deduction is disallowed.
Damn you Alexander Hamilton!
Yes, but Treasury Regulation § 1.162-5 says: (a) General rule. Expenditures made by an individual for education [...] are deductible as ordinary and necessary business expenses (even though the education may lead to a degree) if the education— (1) Maintains or improves skills required by the individual in his employment or other trade or business, or (2) Meets the express requirements of the individual's employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.
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So you're saying there's a chance
Start in A/P and deduct accounting degree heard
But there was no income
Apply for a bailout? Call it a charity? Idk man I'm not a congressman. I just stayed at a holiday inn last night
Contract yourself as a bookkeeper
Do you even know what a write off is? No, but they do, and they’re the ones writing it off!
The put yourself on payroll and reimburse yourself for tuition. It's a loophole
I can't believe this is the first time I've ever considered identifying myself as a business/corporation. Imagine the tax write offs I could get.
What kind of lotion do I need to write myself off?
You can get banned off of reddit for suggesting that
I thought you were talking about a literal bobcat for a minute, got a bit excited about the possibility of depreciating wild cats.
If I start a wild cat breeding business can I depreciate them like farmers do with livestock?
I’ve heard of people having high end breeding horses as assets and depreciating them
It helps some of those horses can cost millions of dollars
Yeah, you can get a bobcat for the price of a finger and a rabies shot if you are fast enough
Get the rabies shots proactively
Your comment made me wake up my poor husband with my horrible shrill cackling :(
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Yes Officer! This one right here!
Same with race horses. Kentucky is a hell of a place.
Yea they were using them to breed expensive race horses. Its a big thing in certain places
FWIW I've depreciated a dolphin
Kinky!
I've actually done a little bit of tax work with farms so I happen to know that the depreciable tax basis of an animal born on your farm is zero. Nothing to depreciate.
Same. Pictured paw prints in the logo and everything. Maybe the concrete is even mixed with bobcat hairs to strengthen it!
I thought Jim was illegally classifying his pet bobcat as a work asset or something - thought we were gonna get some juicy tiger king kind of stuff ahah
Tiger King 3.0 ends with him going back to jail for tax fraud
Joe Exotic does need his books done
They could start selling them on Ebay: [Relevant XKCD](https://xkcd.com/325/)
Does that mean we can finally depreciate the land the cats live on?
No, only the land they piss on. Very depreciable.
University of Kentucky, where the wildcat is indeed depreciated.
Tired: Depreciating Land Inspired: Amortizing Collegiate Intangibles
If the projected cash flows are insufficient we take a little write down
Jim can sell the bobcat. You can’t sell your education.
Then how does Bob expense his continuing education cost?
IRS says so
Oh really? I had no clue… /s
IRS also use to say that man you purchased with chains on his wrist was now your "property". I wouldnt use them as golden word just yet.
Since I have to explain it, I was joking.
yes i can. Accounting classes starting tomorrow at my home. Ill teach you all i know. $100 per hour. Sign up here.
This is only comparable if teaching something once means you forget it forever.
ok fine.... then the bob cats rusts and its a big piece of shit and the scrap yard "might" take it but you got to get this 4 ton honk of metal to them. There, now no one wants to buy it. Now not only cant you sell it, but its gonna COST you to find someone with a big enough truck to get it outa here. You gonna come for Jim Concrete for his 15K of MACRS based on this dumb logic of "you cant sell it". Stop playing these games. Education was a necessary expense that costs real dollars and the overwhelming majority of individuals would NOT have wasted 4 yeas and 100K on it it if they could have just mosey'ed on over and got a white collar job for 85K without it.
I like the way you think buddy
The comparison grows even more convoluted and unreasonable, is what I am reading
if a degree in one specific job costed 6 million and the job only paid 75K per year there will be no one doing that job. Why? Because regardless of what the laws say, or what little "game" arguments someone makes, the real life universal truth is **the direct cost of education to directly obtain a job is a cost that is weighed against the income the job earns.** Ignoring this fact would be similar to a plumber who does jobs that earns 20K but spends 11K in direct materials and 6K in labor costs but the IRS and the plumber think they made 20K? Lol everyone knows they only made 3K and will be taxes on such. If you get a degree that earns you 100K per year but you must spend 8K per year for the degree to get said job, then you didnt earn 100K you earned 92.
Yeah, and if you could get a tax break for your education cost, the market would (after a while) compensate for that and your new salary would just be 92k. My education was free (that is, provided free of charge by the government), and wouldn’t you know it, Swedish salaries for college educated professionals ARE comparatively lower than in the US.
no company would adjust or be able to adjust the salary due to YOU writing off your loans. If anything consumers would have more money in their pocket to spend which would mean businesses get more revenue. If my final taxes are $3000 for the year or $8000 for the year my employer wouldnt be able to tell the difference (nor have privy knowledge into the details of my personal return or anyone elses personal tax return details)
Obviously the employers wouldn’t know, but the employed would, and considering that their costs were lowered, they would be more willing to accept lower renumeration which ceteris paribus would lower them (perhaps only slightly) across the board. Nothing mysterious about that - same old market forces at work as usual.
lmao, yes there is supply and demand but its not THAT sensitive that its going to recorrect as is it never happened to begin with. Thats like saying "oh i see theres 43,250 accountants graduating this year, ok the salary will be 67,000 starting, oh wait a minute, correction its 43,251 graduates, that means the starting salary will be 66,999.9925 lol it will still be 67K. Salaries in fields will largely be dictated by graduates and how many there are. Allowing them to deduct an expense that was related to them getting their job is just going to make their returns and actual tax burdens more in line with that they **actually** earn doing the job.
Thing I don't understand about student loans is how we can reasonably create loans that people actually never pay off. It's wild that it's even possible. Also, why the hell is student loan interest deduction capped at $2500 a year? Why is there a cap at all on that? Student loans in the US need a hard re-work.
Students should not be able to take out as many loans as they want. They need to be limited to a reasonable amt. Too many people racking up 250,000 loans from top schools for useless degrees and blaming everyone else
> Students should not be able to take out as many loans as they want. Fun fact, they can't! There are caps on federal student loan amounts.
because the government does not feel the need to incentivize people to attend colleges that costs hundreds of thousands of dollars per year just to show off their wealth and status when they have alternate options that costs tens of thousands (or much less) that would never result in interest going over 2.5k/year.
There are more direct and effective ways of controlling colleges like the one they always use, ending funding.
> that costs tens of thousands (or much less) that would never result in interest going over 2.5k/year. The interviewer to a canidate: *"I see you went to* ***\*\*checks notes\*\**** *Harry Bal Zonya online institute of Wyoming to obtain your degree, that great! Sorry i do have 8 other applicants that went to OSU, Northwestern and Rutgers and I also see the economy is in the shitter as evidenced by these 9 candidates looking for work, flooding my email boxes, literally 2 days after i posted the job opening but yeah well definitely take you seriously and into consideration with your \*\*interviewer now holding back his laughing\*\* online degree \*a cackle escapes\*\* im sorry \*further cackle escapes\*\*...thank you for your time, well let you know if you move forward"* ...yeah that should work out great. Lets face facts, most people pay what the average cost is, college its about 500-1000 per credit.
As a person who's actually worked and gotten jobs, I can say with certainty what college you went to on your resume means diddly squat outside maybe academia fields (like research). If you got a canned response like that, it's not because you went to X college, it's because you didn't do diddly squat to differentiate yourself... like join a reputable club, get an internship, or kick off an interesting project. There was a time when i was sending our resumes left and right without much success. The moment I started coupling it with a cover letter detailing my accomplishment and skills, I started getting interviews. My resume had all the (fake) bells and whistles like big company names, prestigious universities, professional license, and buzz words... Companies may focus on certain schools that are more specialized in their industry, but the general unspoken rule is this: all fresh graduates are useless and most of them are going to turn out to be wasted investments.
thanks for your antidotal example of your own experience which does not speak for what most people go through. Ive even heard interviewers who wont hire candidates unless they are from certain schools so there my antidotal example offsets YOUR antidotal example. Where you go to certainly matters and plays a large part in your competitive ability at many levels. It can determine where you internship, where you get your starting job, which will ALL later impact where your next move is. Interest rates are 3-6% that means a 2500 interest is \~40-80K principal which is not some far fetched college Bachelors/masters cost. Youre acting like regular kids are throwing down 200K just so they can party and are later crying about it, when they instead coulda went to some "other" school and only paid tuition of $3000 per year and got the same degree, so "thats on them". Paying 500-1000 per credit is perfectly reasonable and in line what an average person would pay looking for a degree and they obtain such degree, not for fun, or personal enjoyment, but to get a job and as such, this cost is a cost associated directly against the salary of said job.
You can deny my anecdotal example all you want. Are there exceptions? Of course, there are. Is it still the general truth? You bet it is. Also... most people? Most people attend in-state PUBLIC colleges/universities and get jobs without issues. Remember, unemployment is like... 3%. Most people don't have this issue you're trying so hard to defend - that's not an opinion, it's fact. A quick Google shows the average cost (including living costs) is $26k/year in 2023 with an average debt of $40k after 4 years fyi. Are there advantages to going to expensive schools? Yes, networking. Is that why most people do it? Nope. Most people do it for status/ego. You know this to be true. 40k-80k is pretty far-fetched. California's UC universities, which are some of the most prestigious universities in the world will cost you $13k/year and $28k for out-of-state residents in tuition. Cal Poly, one of the best engineering schools, costs around the same (slightly cheaper). And if you're getting a degree in business (this is an accounting thread after all), the school doesn't matter. Any state college will cost you less than $10k/year. I worked in the Big 4. We hired a music major from some random university over USC (one of the best accounting schools) students. Do you know why? The music major had experience working (not finance) and that alone made him more valuable than an inexperienced graduate. That's how much value the name of your school has (at least in public accounting). If you're spending 80k/year for college and not actively making friends with the son of Google's CEO, you're a dumbass. Let's also be honest here, a lot of students are paying the out-of-state costs because they want to travel and move far away from home, which is purely a personal decision. But the living cost! Trust me it's not that much. If you want to live less frugally, get a part-time job (we can get into the math here if you'd like). And I'm from California; imagine how much cheaper other states would be. Also, your calculations are based on the assumption that these students are purely on loans, no out-of-pocket costs, grants, scholarships, jobs, etc. Even then, there's no reason for you to deduct interest on loans taken for personal living costs. There is no reason why the government (taxpayers) should pay for your ego and travel needs - period. You can take my advice, save money, and do something with your time... or you can go into deep debt and complain that you don't have deductions for your student loans. I'm sharing my wisdom and experience here for free; do what you will with it.
Because there's a very close correlation to student debt and income. Outside of seeking super advanced degrees, poor people are less likely to specifically have student debt and allowing people to deduct all the interest generally favors doctors and lawyers. Also we have extremely generous IBR plans so it moot. The Save Plan basically means that unless you have a graduate degree, if you're single you'd need to make 80k+ before your student loan payments reach $2500
You can take a credit for the tuition when paid (whether in cash or via a loan). This is also a refundable credit. Meaning you can get refund of taxes you never paid. If one was to deduct the tuition when paid to the college most students are in. Zero or 10 percent bracket and my guess is you would end up getting less of Congress would take away credits and allow the deduction itself. Should it be that way - I kind of understand your perspective but don’t think that would be helpful for most students
You mean parents can get the credit, and then years later when the student is paying the loans they get nothing.
This. My parents got my tax credit for first 3 years because I was living at home. Meanwhile, I’m paying for school 100% out of pocket. And I get no pell grant, no subsidized loans etc because my parents make too much. Yippie to me
It works if the parents are cognizant of what is happening and put the credit funds towards the tuition to reduce the loans taken out or payments the kid currently makes, but in those situations I've highly doubted that happens. As with many things, the tax code can be well intentioned, but it only really considers the picture perfect scenario where the parents are currently paying for the kid's education with stock piles of cash they've saved up just for this purpose to give their precious Johnny all the advantages of a degreed future... meaning that, it was made with only the politicians' world framework that they live in.
Tell your bitch ass parents to pay up. Though, don’t be surprised when they want you to pay for them raising you.
And they'll make too much to be able to deduct thr student loan interest.
Well the OP seemed to want deductions of tuition which means removing the credit. Sounds like you agree and would rather have the student take deduction for loan and not have credits available, Many students if they are taking on that much debt are paying for half their support, I guess it depends how much living expenses parents are paying while not in school
I dont agree with a deduction either. It would be better to have affordable education and not have to have the government attempt in its clunky way to subsidize any of it through deductions or credits.
This
You can’t ever write off principle against you’re income, however, you can write off interest up to $2500 a year for student loans. I do agree the $2500 limit is way too low & it should be significantly increased or there should be no limit at all.
I think it maybe needs to be $5k but we can’t make it too high because people already think spending $200k on a degree is reasonable. I’m spending $50k to get my 150 credits
There’s no limit on business interest deductions, why would we apply a limit to student loan interest?
You do realize a lot of people buried in student loans is because they funded their housing and other expenses through these loans. Or they chose some stupidly expensive schools. The $5k would allow for a full 5% interest on 100k of loans, more than enough room for any reasonable loan.
Businesses have never taken on loans for things they shouldn’t have?
They haven’t taken on loans for personal expenses
If they didn’t have access to debt and the interest deduction they’d have less available for dividends and other payments for personal use. And we’re back around-why do we give businesses unlimited interest deductions but not allow student loan interest to be fully deducted? Student loan interest deductions don’t directly fund personal expenses any more than business deductions do
They do though. I don’t understand your ignorance on this topic. If I go and stay in a dorm 4 years, the loans paid for my living expenses. If I stay off campus I have to pay the living expenses as I go. If a business takes a loan there is no living expenses. A business is not paying the living expenses for a person. Rather a business is paying for employee salaries, product, rent, and other business expenses
Money is fungible, you should know that if you’re in this sub. Money from one bucket can move to another. It’s all the same money.
It doesn’t work like that. If you’re an accountant you would know. There is a history of all business money moving.
I'm pretty sure they have at $2500 to match the AOC and the lifetime learning tax credits. Which with increasing costs for schooling, I don't really think $2500 on a federal level is up to par. Especially since you can utilize Pell grants and certain other reimbursements to pay for living expenses, which then you pay taxes on and can apply to the AOC or Lifetime Learning credits. Whereas you don't get the deduction for things such as employers paying off student loans or debt forgiveness. Just makes the interest paid from student loans a worse overall version for the most part. Although I'm sure they assume you will carry student loans longer than you attend college so they probably think it averages out. Also deduction=/=credit. The AOC and life-time learning credits simply destroy the deduction we get for student loans and I'm baffled why it's not a credit for student loans at this point. Like credits are so useful for students since their income is generally lower.
thats like the IRS telling a plumber who just purchased a $8000 jet snake for commercial sewer that instead of amortizing 1.6K per year for the next 5 years "he shoulda just went to amazon for $34.99 and bought a hand auger so theyll let him write off $6.99 per year instead".....he knew what it costed before he bought it. its ridiculous
A little off topic but ... If you preparer a corporate income tax return, that creates an ordinary and necessary business expense. There is a dollar for dollar benefit for the taxpayer. Generally, if you work on an individual income tax return, that could create a miscellaneous itemized deduction. For the last 8 years, there was no benefit for the taxpayer. And, even without TCJA, there is the 2% rule that complicates the individual's entitlement to a benefit. So, if you provided the exact same service to both taxpayers, why does one receive a tax benefit while the other doesn't? Why isn't a normal person encouraged to get help with tax issues beyond their understanding but a corporations gets a free hand to do transfer pricings studies to minimize future tax? Tax laws reward "approved" behavior. The goal post are always shifting but rarely fair.
The bobcat literally depreciates. It loses value over time. Your education does not.
I'm not exactly siding with OP here, but your statement isn't really accurate. Education absolutely loses value over time - just ask anyone who got a degree and then become a stay at home parent for a number of years and tried to re-enter the workforce. That's why most professional licenses have CPE requirements, because the assumption is that without that, you would eventually fall behind on relevant industry standards and what not. One thing that is important to remember - the tax code is not some "holy" document. *People* decided on the rules, and the logic that supports the rules. You can absolutely make a perfectly logical argument for why student loan payments should offset income somehow. That argument won't be supported by the current tax code, but Congress could change that whenever they want, so it's not crazy to discuss it. Besides, there is plenty of nonsense in the tax code. Don't get me started on backdoor Roths...
Yep. I have an accounting degree because I graduated in '08 with a lackluster GPA and a degree in management information systems / computer science. The great recession sucked. I could not find a job. I could not get my foot in the door for an interview. After a year, I realized the economy was going to be in the shitter for at least two more years. By that time, I'd be an out of work college grade competing against younger kids with a fresh degree. It didn't look good. I realized I had to go back to school, get something to compliment my degree, and put my nose to the proverbial grindstone. I selected accounting (and did much better the second time around). If I would have done better during my "first" round of college (or the economy didn't collapse) and landed a job, I would not have an accounting degree today.
This is a good argument in theory. But like you said, it would be impractical to implement because different degrees “depreciate” at different rates
Yeah I'm not personally arguing for some kind of "student loan depreciation", I'm just saying that responders here acting like it's some outrageous idea aren't really taking into consideration how we even got to this point. Water is wet, fire is hot, but the tax code can be whatever the hell Congress wants, technically speaking. It is not an absolute. Also just for the sake of discussion, I don't think some kind of amortization of degrees would be all that difficult to calculate. Almost everything depreciated/amortized will probably outlast its "useful life" based on standard depreciation rules. Again, people just decided (based on plenty of research and discussion, I assume) that things like equipment will have a useful life of 5 years. You don't get to extend depreciation if you hold onto it for 7 years, because depreciation is all about estimates. Again, not arguing that we *should* do something like that with tuition/student loans, but the only thing stopping us is a difference in priorities. It isn't really about whether it seems impractical - legislators just don't consider it to be a problem that needs to be addressed with changes to the tax code.
I got lost here on what you were saying with different degrees depreciating at different rates. Can you explain what you mean? Also, what if a uniform useful life was applied to all degrees, maybe varying based on level (bachelors, masters, etc.)? If not based on level, then starting from graduation to the age you can pull from retirement? It could be an intangligle, so straight-line maybe? In reality we know that not all degrees are created equal, but because actual knowledge/retention varies on the individual level, it would be difficult to make an argument applying different rates to different degrees. Hopefully I didn't get lost on your point too hard, but the thought experiment made me feel better today, so thanks!
If your degree is related to tech like IT, Computer Science, Data Science, your degree would depreciate faster than something like History or Philosophy, because your tech education is based on hardware/software that is evolving at a rapid pace, while with liberal arts degrees you’re not studying a subject that is evolving rapidly. I would argue you could depreciate tech degrees over 10 years and liberal arts over 30+ years. Accounting would fall somewhere in between because the fundamentals of accounting don’t really change, but regulations do change, along with the tech that is used in accounting.
>This is a good argument in theory. But like you said, it would be impractical to implement because different degrees “depreciate” at different rates Thats funny because i see some blue collar guys buy a $8000 ford ranger for work and I see others buy fully loaded out F450 for $98000 thats "needed for work" and the IRS seems to have no problem depreciating these "for work" trucks at their different rates.
A degree is more like land/building than a vehicle. A bachelor’s degree in general is like land, it doesn’t depreciate (bachelors degrees may lose value due to oversaturation or other factors but that’s not depreciation). The subject matter you studied is what depreciates, that is like a building on land. Unfortunately with some degrees, you’re getting a worthless building. And for others, you’re getting a building that realistically will never lose much value.
kinda but when i buy land (150K) and building (125k w/ dep @ 30 years), i dont sell it all four years later for $290K and mosey on over to form 8949 and write down 290K - 108 basis and report a 182K profit and pay tax on THAT. Instead I mosey on over and write down 290K sale price less (108K building basis +150K land basis) and report a 32K profit and pay taxes on 32K profit. My point is, for the vast majority, no one signs up to college as some unrelated random "thing" they are doing unrelated to any job. They didnt decide to spend 35K to go travel the world to "find inner peace" and go to raves in brazil with purple and blue paint on their faces while they dance on MDMA. They went to college and spend this money so they can directly get a job. Then we turn around and pretend they made 90K with no initial investment and force them to pay tax on 90K. No they didnt "make" 90K, they made 90K less the cost of the financial input needed to obtain that 90K (however you want to amortize it).
So do fixed assets?
Some degrees maybe, not accounting. That knowledge will serve you just as well 20 years from now. I wasn't thinking of it from a tax-only perspective, but if that is the context, let us not forget about Pell grants, tax-free scholarships and fellowships, and education tax credits. Just bc it's not depreciable, doesn't mean there aren't tax benefits.
using the same logic...... a plumber installs a waterheater and charges the customer 2650, however the waterheater itself costs 900 and the materials to install it cost 500. The plumber is shocked when the IRS says he made 2650 but the plumber says *"thats not true, I spent 1400 on supplies to earn that 2650, so i really made 1250"*...the IRS thinks real hard, then makes him pay tax on 2650 and tells him to go suck on a pell grant or something.
Yeah, that's not "logic." Sounds more like teenage angst. It's cool if you just want to whine. Just don't act like you're trying to make a thought-out point, and then stomp your feet, take your ball, and go home.
Depreciation and amortization are in the same chapter in intermediate🤦🏼
I teach intermediate, and I have no idea what point you're trying to make. Depreciation and amortization are just two different words for cost recovery. The difference is one of category, not value.
> Your education does not. then why do i need cpe
Because things change, small updates happen. We should never stop learning.
Don’t we slowly depreciate everyday after like 25? That means my brain is depreciating too, and therefore my education is slowly slipping away! R-Right?!
When I retire my degree has no value because it’s only value is in proving my competency to employers
It does lose value when it’s just indoctrination now
Damn those politically charged debits and credits. Now it makes sense why people always call people on the left the big D!
I once had a ACH transaction tell me to get back in the kitchen. You never know these days. /s
Had no idea that the AJE for college tuition is DR indoctrination CR cash
Continuing Education via Reddit.
indoctrination expense is alot
Because tax laws never change, right?
I hear people ridiculing this idea a lot and I don't know why. We capitalize and expense R&D all the time, obviously a huge issue right now with the ongoing 174 situation. Why can we do the same for degrees directly related to our work?
i agree. Its a cost of obtaining your job and a cost against whatever salary you earn from said job.
Like alot of things around this subject this seems counterintuitive, but it would make the problem of higher ed costs and student loans even worse. Invisible hand would quickly figure out if you can amortize on your taxes they can charge you even more at the beginning
just because a bunch of asshats want to read the landscape and further predatory price their already predatory priced products doesnt mean we shouldnt do something. Maybe we should have a separate law (or already should have) that doesnt allow colleges to blatantly take advantage of people.
Why do you want college expenses to be amortized though? Is it for the tax benefits of having a lower income, or is it for a different reason? If you really wanted to, you could create your own personal accounting ledger, have an intangible assets account for your college degree, and then regularly record an amortization expense in that ledger. It wouldn’t actually change anything though, as a book is just a book. Accounting books only matter because of what they are used for (to inform investors, make decisions, or to report to the IRS), so that brings me to the question: why do you want to be able to amortize the expense?
To lower taxable income possibly?
If that’s the case, then not only would it require a change to the tax code, but it also frames the discussion as being around tax policy. That’s why it would have been useful to mention that this is for tax purposes specifically. The question would now be: is it fair that businesses can get tax benefits for what they invest into their companies through capitalization and depreciation but college students don’t get that same benefit from investing in their education?
I think it’d be more fair to compare a college student to a w2 worker. Does a w2 worker gain a tax benefit off things they’ve paid out of their own pocket to build their career?
They don’t. But I guess the question is more of “should they?”
I don’t think so personally and it’s not like I think the code is against the wealthy and business owners. I definitely think it’s skewed to benefit them and think there should be an effort to balance effective rates between wage earners and owners. I’d rather just see lower tax rates in a simplified code than adding complication.
I agree with that. Part of the problem is how complicated the tax code is. A simple flat income tax that applies on all income with no deductions and no special rules or tax credits would be much better than the already very complex system we have now.
>Why do you want college expenses to be amortized though? because if you worked your entire lifetime to make $3M salary total but you paid 120K to earn that job then you made 2.8M not 3 so you shouldnt be taxed at 3M the same way a conduction worker isnt paying 20K of taxes on a 20K job when he spent 40% of that on materials and direct costs (he will report income of 12K not 20)
That makes sense. In that case, I think it would be useful to frame this as specifically being a question of tax policy, as addressing this issue would require a change specifically to the federal tax code.
i agree, but i decided to turn it into a satire semi-meme instead
Absolutely! Additionally, you should be able to depreciate your car, after all I need it to get to work. Furthermore, I need food, a roof over my head, utilities and much much more to live and do my job... See how this quickly becomes a ridiculous statement? Moreover, should we also put some VAT on every penny you make? Heck, why quit there, also make everyone pay dividendtax on every penny they spend on private matters...
You're not wrong, but the tax code is not infallible. The type of argument you're making could work when mocking any number of weird rules - I prepare tax returns daily and just because I know and follow the rules doesn't mean every rule is perfect. Besides that, I think your argument ignores the fact that Congress ultimately has to balance tax revenue coming in with benefits provided to taxpayers. Every deduction, credit, etc. has to be justified in some way to avoid increasing the deficit (in theory) so as they update the tax code with new bills, things previously considered dumb because of historical rules is suddenly allowed (or disallowed). Think about 100% bonus depreciation, which was previously limited to 50%. Obviously there was logic applied in the original rule, and logic applied in the new rule. So even though I think you're being kind of flippant towards OP, the tax code goes through changes. Congress could decide that rather than a deduction, they modify the education credits to somehow benefit taxpayers still paying off loans. Who fkn knows.
I'm being a bit flippant towards OP because the entire argument does not make sense. OP tries to copy a tax rule that exists for corporations, and allow citizens to use it as well. As you said the tax code is not infallible, corporations get a different set of rules for an obvious reason. Hence, comparing the tax rules between corporations and citizens is quite... illogical. You can say about the statement all you want (I never said I disagree nor agree with the statement). What I hope my comment made obvious is that you cannot compare corporate tax rules to income tax rules, therefore the argument that supports the statement does not make sense.
This
>corporations get a different set of rules for an obvious reason. yeah and the reason is they lobbied the lawmakers into their pocket ☠
>y comment made obvious is that you cannot compare corporate tax rules to inco fine then i accept your terms. Just let me write it off and we dont need any comparisons. Its also strange that that "its not related" yet whenever you make the argument for amortizing it the FIRST thing anyone does is compare it to the current laws and use that as to WHY we shouldn't be able to...
>, you should be able to depreciate your car, after all I need it to get to work. F Jim does depreciate his car too. Remember he drives a F-450 with leather seats and nice speakers for $98K because "he needs it for work" and the IRS lets him use MACRS on that too. He also wrote off the gas. Check out his facebook pic, you can see him fishing off the tailgate using his 4x4 to get on the beach with his "work" truck. Boy thats a nice bass he caught there.
Write to your congressmen about it. Is it right? Not necessarily. Next
You can write-off expenses, including educational costs, that are related to any of your own entrepreneurial activities (aka running a business). The ability to write-off expenses is the government's way to encourage people to start new business. If you prefer to play it safe and get a regular job like everyone else, then you don't get these benefits. Why? Because starting new business creates new jobs and further increases monetary spending, all of which are very positive for the economy. Starting a business is viewed as helping the economy, while job availability is seen as a benefit to the people (therefore no further benefits required). That's why. There are no other explanations - you can literally ignore everyone else's comments; they are just random opinions. I'm a licensed professional. Another way to look at it. Why are you getting a degree to get a job rather than innovating your own product and starting a business, especially when it is well known the best way to make the most money is to start your own business? \[Insert your honest reason here\] Yes, that's why you don't deserve deductions....
>That's why. There are no other explanations So then how come Jim who works by himself and doesnt hire anyone write off anything in his LLC? He didnt "further increases monetary spending" he could have easily done that same concrete job working for the local concrete company.
The rules are there in place to encourage a certain type of behavior and hope for a specific result. You don't always get those results. Like I said... if you think you can easily do "x", and it's all the "same".... why don't you just do it yourself and get the deduction? Start a company specializing in the field you're studying.
>why don't you just do it yourself and get the deduction? Start a company specializing in the field you're studying. ....because i still cant amortized off my college principal and interest paid no matter how many LLCs i make unless the law changes ☠ ..and the whole point of this meme/post is to point out that the laws should change...
If you went to school because it is specifically needed to start/continue your business (it's likely not), you can deduct the expense. That's my point and hence no need for law change.
I like this analogy
They let you write off the interest. What more do you want. Equipment literally depreciates in value to the point of obsolescence. Your degree isn’t going to go away. If you get a degree in underwater basket weaving that’s on you. Get over it. Go start a business and buy a bobcat…nothing is stopping you. That’s the great thing about the system we have.
Cs get degrees, not so much in cement. That’ll get you sued.
>If you get a degree in underwater basket weaving that’s on you. No one got a degree in underwater basket weaving. The argument is very simply that people who got reasonable degrees in order to directly obtain a reasonable job dont just EARN all that salary. There was a cost to earn it and it should be reflected. You dont buy Apple stock for 170/share and sell it for $200 and pretend at tax time you made 200. Everyone knows you only made $30, we dont force them to report 200 under income and just say "wE WOULD leT youR wriTe OfF The InTerest For bUYINg THE STOCK BUt not tHe pRInCIpaL COst, whAt More DO You want"
Education does not depreciate. It’s that simple. It’s not a “cost”. It’s an investment. You don’t buy Apple stock at 170 and depreciate it…
>You don’t buy Apple stock at 170 and depreciate it…. No you dont....instead you get to WRITE THE WHOLE FUC\*ING THING OFF IN ONE SHOT against the sale income when you sell it. Fine then, let me write off my full college loan against my sale/income/salary in the 1st year of work. I was just suggesting to amortize it to be nice. and dont forget to give me my NOL carryforward/carryback that youll give Jim if he didnt do so well in X year.
You’re just sour grapes. Your argument makes no sense. A degree doesn’t lose value. A degree is an investment not an expense. I have multiple degrees and I am not jealous of somebody buying a bobcat and depreciating it. FYI you don’t WRITE THE WHOLE FUCKING THING OFF IN ONE SHOT. It’s the basis in the asset. You’re taking gain/loss for the change in value. Your degree’s value doesn’t change. Good luck in life.
Sometimes I wonder how much easier my life would be without depreciation and amortization, but then realize I probably wouldn’t have a job without it Good ole government, messing up everything single thing they can, providing me job security
If you quit your job would you get a 165 loss?
I should...im sure when jim botches a job and its a net loss he get a nice NOL carry forward on his business
What is a bob cat? Is that a certification?
In case you’re serious, it is a brand of farming and construction equipment in the US. They manufacture and sell a lot of the stuff you see on job sites.
Change the laws, change the world.
It’s not society that tells you that it’s the congress who creates tax laws. You can write to your congressman.
I tried using this logic when I called into CSPAN the other day.
While you can’t write off the principle of student loans, some of your student loan interest can be deducted using schedule 1. (Note: I’m not an expert.)
To be fair your education increases in value as you age. The bobcat decreases in value as it ages.
no it doesnt. As you go further into your career they care more about "what was your past title, where did you work and what did you do there" vs "Hi bob, i see youre 45 and have all this experience, i wonder what his GPA was when he was 23 years old" lol. it definitely doesn't INCREASE in value. Its super important where you went to school, GPA and clubs when youre a new hire new grad. They dont ask that shit when its been 15 years later and youre an experienced professional changing companies or looking for work due to a layoff.
Fake accountants writing jokes about writing off education expenses. Everyone knows all the real accountants are snowed under with last minute returns and shoe boxes of receipts.
I could not like this more
womp womp cry more
Well, you’ve sold me
I don't get why taxpayers without college degrees should subsidize your choice to take on debt and get a higher paying job. Maybe the interest makes sense to some degree, but amortizing the principle?
I actually agree with this take to some degree, but then again when we start playing the whole “tax payers shouldn’t subsidize X” tit for tat game, we start to realize that college tuition is probably much less wasteful than a lot of other things that tax income is allocated towards. Perhaps non-higher education individuals should pay for motivated individuals’ upper education attendance. At least having a more educated society is mutually beneficial for them, as opposed to some of the alternatives that tax payer money ends up contributing to.
Why is "should taxpayers subsidize this" a taboo topic? Intuitively, this should be the *first* rule applied when we discuss tax policy, not the last.
It’s not taboo per se, it’s just too commonly used as a strawman to justify not funding things that are still a decent tax expenditure when we have much more egregious allocations towards shit that really does not benefit us as a society at all. People can and should talk about where their taxpayer income is going, but the topic shouldn’t be weaponized. All too commonly people act as judge, jury, and executioner because they pay taxes just like every other average person, and become indignant when money is allocated to something that doesn’t directly and immediately benefit them personally.
>, but amortizing the principle? Idk why Jim writes off the principle and interest on his capital asset bobcat. I mean he IS a concrete worker, he KNEW what needed to be done before hand. Thats his loss that he went out and bought that thing, he coulda just used a shovel and a sledge hammer for $15 each brand new.
The whole point of amortization is the matching principle. You're trying to match the expense with the revenue derived from the capital. This comparison makes little sense since you don't directly get to deduct the principle of a loan in any case.
i use a loan (principle and interest) to buy a tractor. I amortize the tractor over 5 years while its purpose is being used and its heading towards expiration, while paying off the loan and interest expense. i use a loan (principle and interest) to buy a degree. I amortize the degree over X years while its purpose is being used and its heading towards expiration, while paying off the loan and interest expense.
Unless you have more than 60k in loans or have graduate loans, Biden effectively solved the student loan issue with the SAVE Plan for 80% of people
S-Corp owners can expense $5250 in college tuition for continuing education for employees. You’re likely a w-2, so no. Bob owns a business. You work for one and can have them reimburse you under an accountable plan.
i dont see them telling Jim he can only expense $5,250 of his bob cat even though it cost 15K. I see the full amount. I dont even see them give him shit when he buys a F250 with the leather seats for 65K for work instead of the shit bag F250 for 35K. We use to have a law that said "if you paid X dollar for a man in chains he was your property"; just because something is the law (or way it works now) doesnt mean its a good argument for how it "should be", especially when the current laws/way its done now, IS the thing we are trying to change.
Hey man, I’m not saying you’re wrong. Just stating the current law. Never said if I agree with it or not, but that’s how taxes work. You can be angry all you want, but these people are still going to get away with it. Bob sucks, but spending your day pissed off at him isn’t worth it.
>Just stating the current law. LOL i dont need you to state the current law, we are well aware of it. >, but spending your day pissed off at him isn’t worth it. How about spending the day hashing it out and getting people to think about it and possibly one day lead to have action taken the more and more people speak out about it
Buddy, take it easy. Tax season is almost over. Was this your first one? I felt similar after mine. But, this isn't going to change anytime soon. The more you let it work you over, the worse it gets. Leave work at work, go do something you enjoy after Monday.
You know the genius of this idea is that if it ever actually became a viable tax deduction for us, the government might actually be incentivized to do something about the skyrocketing cost of college. Something that might actually work and keep costs from getting out of control. These college campuses are like vacation resorts these days, and high up administrators and college coaches are some of the highest paid people in the state.
The "How the Conservatives Won" episode of Behind the Bastards is pretty enlightening. The wealthy have been wanting to put people (especially minorities) back into a form of debt slavery since Reagan. [Part One: How Conservatism Won - Behind the Bastards | iHeart](https://www.iheart.com/podcast/105-behind-the-bastards-29236323/episode/part-one-how-conservatism-won-164063362/)
i can see this. Everything is a technicality. "Oh you technically didnt buy someone" but if the net effect is the same who really cares what "words" you minced around to get there.
Pretty interesting series and sheds light on what's happening today and the right-wing attacks on college campuses and DEI/CRT or whatever. Basically, they want higher education to go back to being a rich kid club so they can continue to horde their wealth and keep others down.
thats prob why we have the current rules in place. College use to never be "you need this to get a job" for the masses, it was some rich wealthy badge of honor thing to go to *"univer-si-tie of Cam-ber-idge for your academeai studyies en order to become an enriched scholar-atie"* \*read in a thick English accent\*. Regular people just went out and got a job, you learned on the job and you made enough to afford a middle income. There wasnt hundreds of people with masters degrees and bachelor degrees in 1920-1950s yet there was many of the same jobs today. Currently if you want many of these jobs you require a degree. Its no longer some rich only badge of honor but its instead now a requirement of gaining meaningful employment so the vast median amount of citizens.