Can You Claim CDL School on Taxes? What You Need to Know
Explore tax implications of CDL training, including eligibility, deductions, and essential recordkeeping for accurate tax reporting.
Understanding the tax implications of attending a Commercial Driver’s License (CDL) school is crucial for those in the trucking industry. Tuition and related expenses can be significant, so determining whether these costs are deductible on your taxes could lead to substantial savings.
Work-Related Criteria for CDL Training
To determine if CDL training expenses are deductible, consider whether the training directly relates to your current job. The IRS permits deductions for educational expenses that maintain or improve skills required for your employment. For instance, if you’re already employed as a truck driver and the training enhances your skills or fulfills employer requirements, the costs may qualify. However, training for a new trade or business is generally not deductible.
If the training is required by your employer or by law to maintain your current salary, status, or job, it may also be deductible. For example, a trucking company mandating its drivers to obtain a CDL for continued employment could make these expenses eligible. Keep documentation, such as employer correspondence or job descriptions, to support your claim.
Self-Employed Filing Options
Self-employed individuals in the trucking industry can claim CDL school expenses on Schedule C of their tax return. This form allows deductions for ordinary and necessary business expenses. To qualify, the costs must be generally accepted in the industry and directly beneficial to business operations.
Track all expenses related to CDL training, including tuition, travel, lodging, and materials. Accurate recordkeeping is essential to substantiate deductions. Use accounting tools or spreadsheets to organize these expenses, and ensure any travel costs meet IRS requirements for being primarily business-related.
Employer-Provided Education
When employers offer educational benefits, such as CDL training, it can provide tax advantages for both employees and companies. Under Section 127 of the Internal Revenue Code, employers can offer up to $5,250 annually in educational assistance benefits tax-free. This allows employees to receive CDL training without additional tax liability, while employers can deduct these expenses as business costs.
Employers should establish a formal educational assistance program outlining the types of education covered and the maximum financial support provided. The program must comply with IRS rules and exclude non-business-related activities like sports, games, or hobbies unless part of a degree program or directly related to the business.
Recordkeeping Essentials
Accurate recordkeeping is critical for managing the tax implications of CDL school expenses. Keep receipts and invoices for tuition, materials, and associated costs. Digital tools or cloud-based storage systems can help organize and secure these records.
Maintain a thorough paper trail, including correspondence with educational institutions, proof of enrollment, and payment terms. For travel and lodging expenses, document dates, locations, and purposes of trips to justify their business-related nature. Detailed records not only simplify tax filing but also prepare you for potential audits.
Reporting on Tax Forms
How you report CDL school expenses depends on your employment status and the IRS guidelines. For employees, the Tax Cuts and Jobs Act (TCJA) of 2017 largely eliminated deductions for unreimbursed work expenses, including CDL training. Unless your employer reimburses you or provides tax-free educational assistance, these costs typically cannot be claimed as an itemized deduction.
Self-employed truck drivers, however, can deduct qualifying expenses directly on Schedule C (Profit or Loss from Business). CDL-related costs, such as tuition, exam fees, and study materials, can be listed under “Other Expenses” or a relevant category like “Education and Training.” Ensure these expenses meet the IRS criteria of being ordinary and necessary business costs.
If you receive employer-provided educational assistance, check your Form W-2. Taxable portions of the assistance will appear in Box 1 (Wages, Tips, Other Compensation), while tax-free benefits under Section 127 will not. This distinction is important for accurate tax filing. Self-employed individuals should ensure all deductions are well-documented to avoid audits or penalties. Consulting a tax professional can help navigate these complexities and ensure compliance with IRS rules.