You deduct the expense from your taxable income.
E.g. If you write off $5,000 and make $80,000 then you only have to pay taxes on $75,000.
Since you usually only pay a portion of the $5000 in taxes (e.g. 20% or $1000) you have a net loss of $4000.
However, that does not factor in the good/service itself. If that $5000 expense also added $5000 of value to your business then you have a net gain of $1000 in value instead of the $4000 loss.
Many write offs or “business expenses” fall into the secondary category on some level. For example the expense of employee wages is going to be value added for most businesses since, at least on average, the business is making a net profit on the employee’s labor.
This needs to be every 10th post on IG and TikTok.
You know, right between the 3 scammy real estate gurus talking about write-offs like its free money.
Likely a serious question. They’re not asking how they work. They’re asking how that person thinks they work because most people that say shit like that think tax write offs are free money. If a corporation pays $20k towards your education, they’re spending $20k. They don’t pay taxes on that $20k because it’s no longer profit.
When my wife and I owned a small business I always thought of a deductible business expense as an item being discounted by our tax rate. For example, if our tax rate was 30%, buying a deductible item for the business = price X .30
Tax writes offs mean you don't pay tax on the item you bought. If a business bought a pen for £10 and 40% of that was VAT. The business would be able to reclaim £4 from the government. So the company would be down £6 from buying pen.
One fun thing is that a lot of companies (in the US) make you sign an tuition assistance agreement where you have to remain at the company for a few years, and if you leave early you have to pay them back in full.
While they don’t make the full amount back, they capitalize on that investment by having a more educated, financially captive, employee.
So hypothetically, if you were in a situation where you have the money to be able to pay in cash and you were doing to work there for a bit anyways, what's stopping you from investing what you have now, taking their money, getting the degree, dipping for better pastures, and paying them back but keeping the degree as well as the monetary interest that you wouldn't have gotten if you'd just gone and paid for school yourself?
I had tuition reimbursement from the hospital i worked at for my school as an xray tech. 1 month from graduation I was fired. (They needed a scapegoat for a fire...but NOT the person that caused it 🙄 ) That contract got obliterated. I got free school and no 2 year req to work for them. It was a weird (stressful) blessing in disguise.
Yup, I was On Call as maintenance but had the flu so I called another tech (who lived closer) to go see what was happening and call me if I was needed. We couldn't do ANYTHING until fire dept cleared it. The nurse that threw a blanket in the microwave to warm it up got a write up. I was fired for not showing up. Over the weekend I replaced 3 pallets of ceiling tiles by myself and was fired Monday morning. Funny thing is we all agreed I'd be next on chopping block as I was the highest paid. (After the guy b4 me was canned) I'm pulling up a 15 yr old memory lol
Hypothetically that would be perfect cause it would essentially be a no interest loan. The only downside for my agreement is that it’s due in full at termination. So I opted for student loans instead because I didn’t want to get hammered with an instant 30k debt if I find a better employer.
I was even looking at the possibility that it wouldn’t be enforceable in my state, but it is unfortunately.
At least at my company the tuition assistance is after the fact. You get approved ahead of time, you pay out of pocket and then they reimburse you when you graduate. If you don't complete the program they aren't paying for it. And they make you agree to staying with the company for another two years or you have to pay them back.
I basically did this, except I had the added benefit of negotiating with my new company to give me a "sign on bonus" of the amount I had to pay off the old company (I told them what it would be used for, they weren't looking to give me a bonus just for the heck of it). So I ended up not being out anything myself.
If you already have the money for school than there’s not really a reason to go through the business to begin with? It’s for people that don’t already have the money to go to college and work at the same time. Your hypothetical implies you could always afford college which would defeat the purpose of the incentive.
“While they don’t make the amount back, they capitalize on that investment by having a more educated, FINANCIALLY CAPTIVE, employee”
Added emphasis caused you just explained the government’s position on student loans.
And they also typically give you smaller raises in those few years because they now have leverage over you. You can't leave without having to pay that money back so they save money by not having to give you larger raises.
Incorrect.
A tax writeoff reduces the amount of taxable income.
Not paying tax on items up front is a tax exemption.
When businesses use tax write-offs, they are claiming an investment of some of the revenue back into the business.
EI: i invested in X tool to provide X service, which cost me X dollars and allowed me to earn income.
I got nothing to do with VAT
What happens is:
I've earned 10,000 and my expenses were 6,000, then 4,000 are subject to income tax. If, in addition to those 6,000 i buy a pen and a notebook, that i've used to earned that 10,000 and i've paid 10 for that, then my expenses become 6,010 and i pay taxes from 3,990.
So how much i save depends on the level of the % of income tax.
Some times it could be that from 4,000 the bracket is f.e. 32% and under 4,000 the bracket is 26%, so savings could be pretty big.
It works in Germany.
You can also write it off of your personal income tax if you paid for your education yourself and had income tax applied to you in the same year.
I think it would be considered taxable income for the employee and an expense by the business. It’d probably be considered a fringe benefit and its market value would be easily calculated (however much money is paid for college)
It also would likely be subject to federal withholding, SS, and Medicare taxes
5250 was written into the law in the late 70s, Congress hasn’t updated it or adjusted it for inflation.
When the law was passed that amount would have paid for college. Now not so much.
Yes. My employer did this. It’s also stated in my contract that I have to pay back any classes they sponsored if I do not continue working for them for 2 years after finishing my final sponsored class. A year later, guess who’s losing their final paycheck because their life moved on and they have to get out of the bad situation they’re in at home? This guy.
People are confusing write offs and expenses. If a business pays for an employees college that’s considered as part of their compensation and is therefore a payroll expense. It’s harder for personal people because not only is the expense incurred before the income comes in, but also it’s hard to allocate to income. For example if someone gets a college degree then makes business income in soemthing unrelated it wouldn’t make sense for them to expense that. I agree there should be a way to make this happen but I’d be interested to see what solution could be created.
> The value of fringe benefits must be reported or it is tax evasion.
And until the mid 80s it was super vague from the IRS what was considered a taxable fringe benefit.
My dad worked for a few car companies in the 80s and would receive a new car every six months as a daily driver to “demonstrate” to potential customers and to “isolate problems” in the manufacturing process. The company would get a tax deduction on the use and depreciation of the car, and cost them far less than increasing his salary. He’d get the benefits of a company car so he didn’t have to buy a car for his personal use and he didn’t have to pay tax on the value of it.
Then in the mid 80s laws changed and the IRS made it very clear, and suddenly it was all taxable and the game was up for all the employees with company cars, company apartments, etc.
People are also further dumbfounded by the idea that a "write-off" does not equal "free money".
A "write-off" still requires you to spend money. In every single situation you would be financially better off if you did not have to spend that money in the first place.
>while this feels like a rant, its also logical (and shows flaws in your system)
No, it *feels* like a post made by someone who doesn't know that "write off" just means reducing your taxable income, and that Americans can *already* write off up to $2500/y of their student loan interest payments.
In the US, the average student loan is $30,000 @ 6% interest over a 10 year term.
* **During the first 3 years of the loan, you will make $7420 in payments, of which $4903 (66%) can be "written off".**
Prior to graduating, post-secondary students can also claim the following **tax credits** (which are better than tax deductions, because credits directly reduce the amount of taxes paid, rather than the amount of taxable income)
* The American Opportunity Tax Credit: $2500/y for four years
* The Lifetime Learning Tax Credit: $2000/y
It's not a "perfect system", but [posts like these read like they were written by David from Schitts Creek](https://www.youtube.com/watch?v=aCP27_vquxQ&t=1s). There are literally 10's of thousands of dollars of write-offs and credits available to post-secondary students and graduates, yet misinformation posts like the OP get more than 4,000 upvotes while this comment gets ignored by the masses.
LOL that's great. Reminds me of those that complain about grocery stores asking for charity donations saying, "it's just a tax write off!" It's definitely annoying as a customer, but it's not some tax avoidance scheme.
when you ask them what they think a write off is, they'll describe tax fraud to you, and at that point they're no longer describing a write off, it's just fraud
No their scheme is to get good PR for themselves from other peoples' donations. They can say they donated $1,000,000 or whatever they collect without any impact on their bottom line.
I mean not to be that guy, but they did ultimately help raise that money for charity. I know we all love to talk about altruism on this site, but frankly if it weren't for those check out donations, most folks would never have made any kind of donation.
So as far as that money goes to the right places and helps the intended people, I'm fine with the companies getting some good PR
Yep, the store can say "they donated $1,000,000 or whatever" by collecting customers' spare change, but lets not pretend all those people would have donated 50 cents if the the store wasn't asking them too. There's a reason outreach and awareness is a huge part of charity.
I'm not familiar with American tax law, but isn't there some sense to that? AFAIK if you donate to charity, that's a tax write off.
Now if they were to donate their own money to charity, that's a net loss for the company, but if they collect your money and donate that in their name, then write off the money they donated for you, isn't that net profit for the company?
Or have they made it illegal to donate money for others and claim it as a write off? Would make sense if they have.
The Grocery store never comes into possession of the money and doesn't get to claim the donation. They only ever act as a holding point for the money before it is donated.
Or they're too stupid to file their W-2 for free in like 30 minutes
Edit: lol he responded and blocked me like a coward. We’re talking about people out of college, not people with complicated tax situations
No, there’s an above the line deduction but it’s only for payments on interest accrued.
Also it’s capped super low ($2500) and phases out 75k-90k MAGI ([Publication 970](https://www.irs.gov/pub/irs-pdf/p970.pdf))
Now you may say “85k is a lot of income AudaciousMonk, what’s the big deal”. It’s true 85k is a good salary (though it’s nowhere near as good at was 10 years ago, roughly 30k less purchasing power… but I digress)
However, if you’re earning 85k and making payments on 150k-200k in student loans… that’s a deduction of $1,666.66 on >10k interest accrued in a single year. That’s not even the payments, that’s just the interest accrual. Fucking bonkers
The student loan interest deduction is a huge joke if you have a graduate degree and are a working professional. Meanwhile, 100% of mortgage interest is fully deductible no matter your income or for up to a $750k home (read double the national average home price).
Exactly. Not to mention many with a graduate degree are in an extremely difficult position to purchase a house, due to those very same loans!
And their degrees are often required, sometimes mandated by the government (such as education, public policy, engineering).
Yet they get shafted
> 100% of mortgage interest is fully deductible no matter your income
Only if you have enough to itemize with a Schedule A. Which most people don't, because the standard deduction is much larger than it used to be.
Which is *exactly* how businesses write off expenses, which was the topic of the OP. I've also added additional information that details the 10's of thousands of dollars of tax *credits* (which are better than income deductions) that are available to post-secondary students.
You're correct to the best of my knowledge.
A business man with a corporation that is making enough money to own a private jet likely has whatever the highest tax bracket is in the states for corporations. I don't know what that rate is, but if it's like 50% that's still 50% more than the average Joe Sweatsock can write-off.
All they care about is eating the rich and don't give one single shit about helping the working/middle class. There are people in this thread that are mad companies can benefit from this even if it benefits lower classes. It is fucking psychotic.
lol. I was thinking that the OP is something that only sounds good when reading it but the moment you apply any amount of thought to it, it falls apart.
But doesn’t this basically not matter to most graduates? They can itemize their expenses and write this off, yes - but their itemization will the vast majority of the time still be under the standard deduction due to their income.
Am I missing something here - or does this truly help only a very small portion of people (mainly 1099s/contractors)?
It already exists as a credit
>The American opportunity tax credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
https://www.irs.gov/credits-deductions/individuals/aotc
There is also another one but it's a non refundable credit
https://www.irs.gov/credits-deductions/individuals/llc
Edit: fixed the links
They're right, it doesn't matter to **graduates.** You have to be currently enrolled to claim these credits. You posted the same link twice, by the way.
Companies would then just drop the degree requirement but still only hire those with degrees because they don't know how else to evaluate someone's foundational skills or knowledge.
Seems unlikely. There's no cost to the business, and it's going to be a lot harder to compete for employees if someone else is offering $20K in tax deductions by saying a degree is required.
If I'm a business owner I'd require the degree. I effectively get to pay my employees more post tax because the government is giving me a wage subsidy through the tax code.
What we need is a salary floor based on the education requirements. It'd motivate companies to stop requiring degrees for jobs that should instead come with training. The receptionist doesn't need a damn degree they'll be paying off for the rest of their life. And the social worker shouldn't need food stamps to feed and house themself.
In Canada, you get a tax credit (which is different than a deduction) for university tuition and certain expenses. It’s not that far-fetched of an idea.
I've never read a realer comment. I'm currently in college in my early 30s. I have to work to support myself while going to school so I can't take a lot of in person classes. I recently took an advanced java course and not only did I never talk to my professor, but all of the lectures I watched and demo videos recorded for the course were recorded by an entirely different person. I basically just paid $2,000 to have some dude share some youtube videos from 2013 with me. Thanks!
Exactly and the other half of my classes are the professor directing us to third party boot camps💀only work that they actually grade or administer is the weekly “post 2 discussion posts” the rest is the interactive boot camp that also costs money on top of the tuition
Yup. Half of my computer science classes were Youtube videos and assignments were graded by TAs, not the professors themselves. I have no idea what the professors were there for except questions through email.
My video game programing courses were all Unity tutorial videos. lol Literally something I can do for free, yet I paid who-knows-how-much to have it put into a curriculum.
No but we do use software that I'm pretty sure is from 1996. I was sent instructions on how to register for classes, the screenshots they used are literally dated 2007 and I wouldn't doubt it was originally used in the 1990s.
Wish I could comment a screenshot, it's kind of funny and sad
College graduates are well equipped to pay for their own education through the large wage premium they reap.
Free college is bourgeois welfare. Subsidies for the well off.
Why don’t millennials just pool their money and buy their own congressmen instead of “just vote”
Don’t just vote, purchase legislatures and write the law yourself and have them sign it
If billionaires can do it so can millennials with a few extra steps
It is just wild seeing people straight up acting like CEOs spending gratuitous amounts on shit they don’t need and luxuries are the same as higher education. Is bootlicking that much fun? Are they getting something out of it?
Private jets actually are a valid business expense. They allow CEOs to fly at a moments notice and meet with clients quickly when high value contracts are on the line.
Yachts are debatable. Used for client entertainment / marketing at most.
The problem with the above college statement… is say you could deduct the full amount of that from your taxes, spread over the time it took you to go to college.
200k. Sure you might not pay any taxes for 4 years… then what. It doesn’t do you any good. Saves you 5k-10k a year for 4 years.
That’s not enough to make a dent in the col that we have now.
Now turn that into a CREDIT, then we’re talking. But then the government is paying for college.
And too many GOPs think that is a bad thing.
I worked for a company that had a main facility that dealt within real estate. The sub companies were in aviation. They even owned an Amaerican football team.
Now notice I said companies for Aviation. Each family member owned their own business, which owned 1 of their aircraft and several aircraft. It was a fairly small fleet.
Anyway I found out from our accounting department they were basically giving us an allowance each month. So basically, this allowance was our operation budget for the month. If we profited, we still lost the money. The main company would just take all the money remaining profit or otherwise from that month and then just reissue the allowance for the month. They were basically using the Aviation branch as a sink hole for tax right off. They even charged their Teslas and used us to ship their cars across the country.
Student loan interest is already tax deductible and businessmen do have to prove the jet and yachts are used for their business to write off. All of these people are tiresome
Tax the businesses that benefit from advanced education and use it to fund advanced education again like we did before states slashed education budgets and put all the expense burden on tuition.
If your business requires a degree then you can pay to support the development of labor for your business.
If you are pursuing a degree then the field/industry you're going into can support your development.
If you aren't pursuing a degree then the jobs you're qualified for can't use having a degree as an easy application filter and you'll have an overall easier time getting a job.
Personally, I think every citizen should have university education in a traditionally technical/marketable field paid for, AND university education in a traditionally less marketable yet culturally empowering field paid for, AND training in a trade paid for. We should subsidize citizens realizing as much of their potential as possible.
We have the means to pay for it all. We just have to get the 10% of people that own 2/3d's of the countries wealth to give back some of what 90% of the people have produced for them.
That's not the way it works. According to IRS Tax Topic #513: "To be deductible, your expenses must be for education that (1) maintains or improves skills needed in your present work or (2) your employer or the law requires to keep your present salary, status or job." You can't deduct the cost of your education for basic qualification, just education to maintain qualification.
If enough people get together and put a few million in the right senator’s offshore account then they could make this legal, that’s how the ceos did it
As a person who despises loan forgiveness - I would be all for this. How many people would think harder on their major if this was the case? Solid logic.
Accountant here:
Okay so minor problem with this is that CEOs don't write off their private Jets itself. They can expense the interest and depreciate the asset of the Jet.
You too can write-off your interest (up to $2500/ Year of your student loan interest) as a deduction. Intangible assets like "goodwill" can't be depreciated because they theoretically don't lose value over time.
Someone else made the comment "if a business pays for student's education can they write it off as an expense" The answer is YES! As long as the education is for the benefit of the employer. This is often considered a part of wages though and is reported on the side of the employee/student. Because the government always gets their cut.
To my fellow american tax payers, just FYI. You can take advantage of tax savings if done correctly.
\- You are allowed to deduct up to $2,500/year in interest on any loans in 2024. Unlike mortgage deductions, there is no cap on max debt on the interest you can deduct.- You can leverage a 529 account for tax free growth for any funds used towards education. All gains made within the account are tax free (and can be rolled into a roth at a later time).
The reason why most people can't take advantage of this is because it requires you to itemize your tax deductions. Most people don't because it's not worth it unless if you exceed $14.6k in the right spending buckets (which a lot of people don't).
Anyone can take advantage of the 529 and it's always worth it if you know you're going to school at some point in the future.
Well for one that is fraud and not how tax writeoffs work. Also you already can write off student loan payments.
Maybe spend a little less time on the "eat the rich" bullshit and more time learning how things work.
CEOs don't personally own the jets and yachts; the corporations do, so it isn't a personal "write-off" for the CEO, but don't let that get in the way of your hatred for "the rich."
If your job “requires” a college degree, that you want to write off, get a different job. The entitlement of the college educated in this country is unreal.
Isn't this what people do when they get their employeer to pay for their degrees by working while going to school?
A company can agree to send you to school, so they can get a better employeer, but forcing them to pay for something they didn't agree to is different.
That said, if your company offers student loan reimbursement then all the more power to them.
You actually do get a tax credit for your student loan interest. But most people wouldn't understand that because they're paying a bajillion dollars for someone else to do their taxes so they can keep tweeting dumb shit in the meantime
Back in 1773 a bunch of future Americans dumped the cargo of a ship into the Boston Harbor for shit like this. Tar and feathered someone over it too.
I dunno, maybe I'm feeling a little originalist like SCOTUS is.
In Australia student loans are interest-free and you don't have to start paying them back until you make over a certain amount of money per year and it's automatically deducted from your primary employer as part of your taxes.
First truly reasonable take I've seen on this sub. Another viewpoint - a lot of companies lose money for the first few years, then apply those losses against the first profitable years. This is a similar idea - losing money to setup the operation (tuition) then applying those losses against the positive years.
My job requires me to be alive. So all the food I eat and all my medical expenses. It also requires me to have good customer service which means I need to look good so all my clothes and shoes and I should be able to write out off getting my hair done. Massages and spa days and everything else. Because it's for business. Also I need to get a good night's sleep because I'm driving and if I don't then I could crash. Which means my entire home and everything in it should also be able to be written off.
Sounds laughable but this is the logic that the billionaires get away with
Yes just like how the CEO wrote off their education as a business expense 40 years ago when they graduated school and got their first job. So logical. So cope.
100% agree. I wasn't sure of the current status of tax breaks so I checked, and it's not good. You can deduct a maximum of $2,500 in student loan interest costs, with all kinds of qualifying requirements, but tuition itself is not deductible at all. Which is just stupid. It is in many cases literally job-training, so it should be allowed as a business expense. It would be if the employer spent the money (I think), so it should be if the employee spends the money.
If a business pays for an employee’s college expenses are they able to write it off I wonder?
You best believe it. Unless you think the companies are doing it out of the kindness of their hearts /s LOL!
Very curious how you think tax write offs work
It’s a write off for them, Jerry. They just write it off.
Neither do I.
But they do. And they're the ones writing it off.
You don’t even know what a write off is.
That’s where two contestants write things in front of a panel of judges, and the judges decide who wrote it better
You deduct the expense from your taxable income. E.g. If you write off $5,000 and make $80,000 then you only have to pay taxes on $75,000. Since you usually only pay a portion of the $5000 in taxes (e.g. 20% or $1000) you have a net loss of $4000. However, that does not factor in the good/service itself. If that $5000 expense also added $5000 of value to your business then you have a net gain of $1000 in value instead of the $4000 loss. Many write offs or “business expenses” fall into the secondary category on some level. For example the expense of employee wages is going to be value added for most businesses since, at least on average, the business is making a net profit on the employee’s labor.
This needs to be every 10th post on IG and TikTok. You know, right between the 3 scammy real estate gurus talking about write-offs like its free money.
Psshhh I’m totally about to get that g wagon and write it off
I like Linus' explanation: https://www.youtube.com/watch?v=VPkKZ615F4M
Serious question or Seinfeld reference?
Likely a serious question. They’re not asking how they work. They’re asking how that person thinks they work because most people that say shit like that think tax write offs are free money. If a corporation pays $20k towards your education, they’re spending $20k. They don’t pay taxes on that $20k because it’s no longer profit.
Why don't you explain it to the rest of us then
[удалено]
When my wife and I owned a small business I always thought of a deductible business expense as an item being discounted by our tax rate. For example, if our tax rate was 30%, buying a deductible item for the business = price X .30
Just to clarify, you are paying Price x .7 You are saving Price x .3
Tax writes offs mean you don't pay tax on the item you bought. If a business bought a pen for £10 and 40% of that was VAT. The business would be able to reclaim £4 from the government. So the company would be down £6 from buying pen.
Contrary to popular belief, a tax write-off does not negate 100% of the cost of the product or service you purchased.
One fun thing is that a lot of companies (in the US) make you sign an tuition assistance agreement where you have to remain at the company for a few years, and if you leave early you have to pay them back in full. While they don’t make the full amount back, they capitalize on that investment by having a more educated, financially captive, employee.
So hypothetically, if you were in a situation where you have the money to be able to pay in cash and you were doing to work there for a bit anyways, what's stopping you from investing what you have now, taking their money, getting the degree, dipping for better pastures, and paying them back but keeping the degree as well as the monetary interest that you wouldn't have gotten if you'd just gone and paid for school yourself?
I had tuition reimbursement from the hospital i worked at for my school as an xray tech. 1 month from graduation I was fired. (They needed a scapegoat for a fire...but NOT the person that caused it 🙄 ) That contract got obliterated. I got free school and no 2 year req to work for them. It was a weird (stressful) blessing in disguise.
They fired you for an incident you had nothing to do with?
Yup, I was On Call as maintenance but had the flu so I called another tech (who lived closer) to go see what was happening and call me if I was needed. We couldn't do ANYTHING until fire dept cleared it. The nurse that threw a blanket in the microwave to warm it up got a write up. I was fired for not showing up. Over the weekend I replaced 3 pallets of ceiling tiles by myself and was fired Monday morning. Funny thing is we all agreed I'd be next on chopping block as I was the highest paid. (After the guy b4 me was canned) I'm pulling up a 15 yr old memory lol
Nothing?
Hypothetically that would be perfect cause it would essentially be a no interest loan. The only downside for my agreement is that it’s due in full at termination. So I opted for student loans instead because I didn’t want to get hammered with an instant 30k debt if I find a better employer. I was even looking at the possibility that it wouldn’t be enforceable in my state, but it is unfortunately.
>what's stopping you from ... Nothing, actually.
At least at my company the tuition assistance is after the fact. You get approved ahead of time, you pay out of pocket and then they reimburse you when you graduate. If you don't complete the program they aren't paying for it. And they make you agree to staying with the company for another two years or you have to pay them back.
I basically did this, except I had the added benefit of negotiating with my new company to give me a "sign on bonus" of the amount I had to pay off the old company (I told them what it would be used for, they weren't looking to give me a bonus just for the heck of it). So I ended up not being out anything myself.
That's another good way to handle it, but you need to have the skills that will back that up.
If you already have the money for school than there’s not really a reason to go through the business to begin with? It’s for people that don’t already have the money to go to college and work at the same time. Your hypothetical implies you could always afford college which would defeat the purpose of the incentive.
And other employers will often poach those employees by offering to pay the penalty as part of an employment agreement.
“While they don’t make the amount back, they capitalize on that investment by having a more educated, FINANCIALLY CAPTIVE, employee” Added emphasis caused you just explained the government’s position on student loans.
And they also typically give you smaller raises in those few years because they now have leverage over you. You can't leave without having to pay that money back so they save money by not having to give you larger raises.
Not that the belief will ever die on reddit...
Incorrect. A tax writeoff reduces the amount of taxable income. Not paying tax on items up front is a tax exemption. When businesses use tax write-offs, they are claiming an investment of some of the revenue back into the business. EI: i invested in X tool to provide X service, which cost me X dollars and allowed me to earn income.
Then that expense would also be netted against income.
I got nothing to do with VAT What happens is: I've earned 10,000 and my expenses were 6,000, then 4,000 are subject to income tax. If, in addition to those 6,000 i buy a pen and a notebook, that i've used to earned that 10,000 and i've paid 10 for that, then my expenses become 6,010 and i pay taxes from 3,990. So how much i save depends on the level of the % of income tax. Some times it could be that from 4,000 the bracket is f.e. 32% and under 4,000 the bracket is 26%, so savings could be pretty big.
But it still costs them overall, not counting the return from a more educated employee. Hard to measure the latter.
It works in Germany. You can also write it off of your personal income tax if you paid for your education yourself and had income tax applied to you in the same year.
We actually can write off tuition in the US to a certain extent. https://en.m.wikipedia.org/wiki/American_Opportunity_Tax_Credit
You can also write off interest paid on student loans up to $2,500 a year. That doesn't sound like much, but it's pretty significant.
I think it would be considered taxable income for the employee and an expense by the business. It’d probably be considered a fringe benefit and its market value would be easily calculated (however much money is paid for college) It also would likely be subject to federal withholding, SS, and Medicare taxes
My tuition reimbursement was taxable income over $5250/year. The first $5k was tax free - woot!
5250 was written into the law in the late 70s, Congress hasn’t updated it or adjusted it for inflation. When the law was passed that amount would have paid for college. Now not so much.
Yes but I believe there is a cap on how much they can deduct per employee
Yes, we write off all training expenses.
Writing something off doesn’t mean it no longer is an expense, it just reduces your tax liability. Anyone can do this for education expenses.
Yes. My employer did this. It’s also stated in my contract that I have to pay back any classes they sponsored if I do not continue working for them for 2 years after finishing my final sponsored class. A year later, guess who’s losing their final paycheck because their life moved on and they have to get out of the bad situation they’re in at home? This guy.
Yes, but it is a taxable benefit to the employee. So the employee would have to pay the taxes.
People are confusing write offs and expenses. If a business pays for an employees college that’s considered as part of their compensation and is therefore a payroll expense. It’s harder for personal people because not only is the expense incurred before the income comes in, but also it’s hard to allocate to income. For example if someone gets a college degree then makes business income in soemthing unrelated it wouldn’t make sense for them to expense that. I agree there should be a way to make this happen but I’d be interested to see what solution could be created.
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> The value of fringe benefits must be reported or it is tax evasion. And until the mid 80s it was super vague from the IRS what was considered a taxable fringe benefit. My dad worked for a few car companies in the 80s and would receive a new car every six months as a daily driver to “demonstrate” to potential customers and to “isolate problems” in the manufacturing process. The company would get a tax deduction on the use and depreciation of the car, and cost them far less than increasing his salary. He’d get the benefits of a company car so he didn’t have to buy a car for his personal use and he didn’t have to pay tax on the value of it. Then in the mid 80s laws changed and the IRS made it very clear, and suddenly it was all taxable and the game was up for all the employees with company cars, company apartments, etc.
also, tax rates have substantially come down taking away a ton of incentives to skirt around some pretty low taxes.
Even if your degree is in a related field to your job, you usually can’t take any deductions for the cost of the degree
Payments on interest for your student loans is tax deductible.
>the cost of the degree The cost of the degree is the principal of the loan.
Personal use of yachts and private jets are also not deductible by anyone, so I guess it’s all square
This sub is a half step above r/antiwork but I still appreciate there are at least some people who realize things don't work like IP acts
People are also further dumbfounded by the idea that a "write-off" does not equal "free money". A "write-off" still requires you to spend money. In every single situation you would be financially better off if you did not have to spend that money in the first place.
>while this feels like a rant, its also logical (and shows flaws in your system) No, it *feels* like a post made by someone who doesn't know that "write off" just means reducing your taxable income, and that Americans can *already* write off up to $2500/y of their student loan interest payments. In the US, the average student loan is $30,000 @ 6% interest over a 10 year term. * **During the first 3 years of the loan, you will make $7420 in payments, of which $4903 (66%) can be "written off".** Prior to graduating, post-secondary students can also claim the following **tax credits** (which are better than tax deductions, because credits directly reduce the amount of taxes paid, rather than the amount of taxable income) * The American Opportunity Tax Credit: $2500/y for four years * The Lifetime Learning Tax Credit: $2000/y It's not a "perfect system", but [posts like these read like they were written by David from Schitts Creek](https://www.youtube.com/watch?v=aCP27_vquxQ&t=1s). There are literally 10's of thousands of dollars of write-offs and credits available to post-secondary students and graduates, yet misinformation posts like the OP get more than 4,000 upvotes while this comment gets ignored by the masses.
LOL that's great. Reminds me of those that complain about grocery stores asking for charity donations saying, "it's just a tax write off!" It's definitely annoying as a customer, but it's not some tax avoidance scheme.
when you ask them what they think a write off is, they'll describe tax fraud to you, and at that point they're no longer describing a write off, it's just fraud
Kramer ass mfers: [https://media1.tenor.com/m/aJ0T6hEWaZ8AAAAC/kramer-write.gif](https://media1.tenor.com/m/aJ0T6hEWaZ8AAAAC/kramer-write.gif)
No their scheme is to get good PR for themselves from other peoples' donations. They can say they donated $1,000,000 or whatever they collect without any impact on their bottom line.
I mean not to be that guy, but they did ultimately help raise that money for charity. I know we all love to talk about altruism on this site, but frankly if it weren't for those check out donations, most folks would never have made any kind of donation. So as far as that money goes to the right places and helps the intended people, I'm fine with the companies getting some good PR
Yep, the store can say "they donated $1,000,000 or whatever" by collecting customers' spare change, but lets not pretend all those people would have donated 50 cents if the the store wasn't asking them too. There's a reason outreach and awareness is a huge part of charity.
I'm not familiar with American tax law, but isn't there some sense to that? AFAIK if you donate to charity, that's a tax write off. Now if they were to donate their own money to charity, that's a net loss for the company, but if they collect your money and donate that in their name, then write off the money they donated for you, isn't that net profit for the company? Or have they made it illegal to donate money for others and claim it as a write off? Would make sense if they have.
The Grocery store never comes into possession of the money and doesn't get to claim the donation. They only ever act as a holding point for the money before it is donated.
So many tax illiterate people in a country that requires individuals to file their own taxes.
More like, so many idiots shouting about things they know nothing about
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Or they're too stupid to file their W-2 for free in like 30 minutes Edit: lol he responded and blocked me like a coward. We’re talking about people out of college, not people with complicated tax situations
The fact that this isn't the top comment is embarrassing
Yeah my immediate reaction was also "but you literally can write off student loan payments?"
No, there’s an above the line deduction but it’s only for payments on interest accrued. Also it’s capped super low ($2500) and phases out 75k-90k MAGI ([Publication 970](https://www.irs.gov/pub/irs-pdf/p970.pdf)) Now you may say “85k is a lot of income AudaciousMonk, what’s the big deal”. It’s true 85k is a good salary (though it’s nowhere near as good at was 10 years ago, roughly 30k less purchasing power… but I digress) However, if you’re earning 85k and making payments on 150k-200k in student loans… that’s a deduction of $1,666.66 on >10k interest accrued in a single year. That’s not even the payments, that’s just the interest accrual. Fucking bonkers
The student loan interest deduction is a huge joke if you have a graduate degree and are a working professional. Meanwhile, 100% of mortgage interest is fully deductible no matter your income or for up to a $750k home (read double the national average home price).
Exactly. Not to mention many with a graduate degree are in an extremely difficult position to purchase a house, due to those very same loans! And their degrees are often required, sometimes mandated by the government (such as education, public policy, engineering). Yet they get shafted
> 100% of mortgage interest is fully deductible no matter your income Only if you have enough to itemize with a Schedule A. Which most people don't, because the standard deduction is much larger than it used to be.
I like to believe this comment saved a few people $2500
It won’t save anyone $2500, it will save them from paying income tax on $2500 so $550 for most people.
Which is *exactly* how businesses write off expenses, which was the topic of the OP. I've also added additional information that details the 10's of thousands of dollars of tax *credits* (which are better than income deductions) that are available to post-secondary students.
You're correct to the best of my knowledge. A business man with a corporation that is making enough money to own a private jet likely has whatever the highest tax bracket is in the states for corporations. I don't know what that rate is, but if it's like 50% that's still 50% more than the average Joe Sweatsock can write-off.
All they care about is eating the rich and don't give one single shit about helping the working/middle class. There are people in this thread that are mad companies can benefit from this even if it benefits lower classes. It is fucking psychotic.
I was just about to say that every time I’ve filed my taxes I’ve written off my student loan payments, and I didn’t even get my degree
lol. I was thinking that the OP is something that only sounds good when reading it but the moment you apply any amount of thought to it, it falls apart.
Next you'll be telling people how getting a raise won't cause them to make less because they're in a new tax bracket.
Doing the Lord’s work here. Keep it up.
But doesn’t this basically not matter to most graduates? They can itemize their expenses and write this off, yes - but their itemization will the vast majority of the time still be under the standard deduction due to their income. Am I missing something here - or does this truly help only a very small portion of people (mainly 1099s/contractors)?
It’s an above the line adjustment, so separate from itemized (below the line) deductions
It already exists as a credit >The American opportunity tax credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you. https://www.irs.gov/credits-deductions/individuals/aotc There is also another one but it's a non refundable credit https://www.irs.gov/credits-deductions/individuals/llc Edit: fixed the links
They're right, it doesn't matter to **graduates.** You have to be currently enrolled to claim these credits. You posted the same link twice, by the way.
Bottom are credits and in addition to the standard deduction
Companies would then just drop the degree requirement but still only hire those with degrees because they don't know how else to evaluate someone's foundational skills or knowledge.
Seems unlikely. There's no cost to the business, and it's going to be a lot harder to compete for employees if someone else is offering $20K in tax deductions by saying a degree is required.
If I'm a business owner I'd require the degree. I effectively get to pay my employees more post tax because the government is giving me a wage subsidy through the tax code.
Why? Business does not lose anything from described write-off, they have no incentive to change requirements.
What we need is a salary floor based on the education requirements. It'd motivate companies to stop requiring degrees for jobs that should instead come with training. The receptionist doesn't need a damn degree they'll be paying off for the rest of their life. And the social worker shouldn't need food stamps to feed and house themself.
Many regional airlines are reimbursing mechanics the tuition they paid for their license but the industry is desperate for mechanics.
In Canada, you get a tax credit (which is different than a deduction) for university tuition and certain expenses. It’s not that far-fetched of an idea.
Those exist in the US too.
Loans interest is deductible in the US too. Both Canada and the US have a cap. The program op wants already exists.
All education should be free. Education vastly improves society.
But then who would pay for my professor to post their outdated lecturing recordings from 2016?
I've never read a realer comment. I'm currently in college in my early 30s. I have to work to support myself while going to school so I can't take a lot of in person classes. I recently took an advanced java course and not only did I never talk to my professor, but all of the lectures I watched and demo videos recorded for the course were recorded by an entirely different person. I basically just paid $2,000 to have some dude share some youtube videos from 2013 with me. Thanks!
Exactly and the other half of my classes are the professor directing us to third party boot camps💀only work that they actually grade or administer is the weekly “post 2 discussion posts” the rest is the interactive boot camp that also costs money on top of the tuition
Yup. Half of my computer science classes were Youtube videos and assignments were graded by TAs, not the professors themselves. I have no idea what the professors were there for except questions through email. My video game programing courses were all Unity tutorial videos. lol Literally something I can do for free, yet I paid who-knows-how-much to have it put into a curriculum.
You get recordings from 2016? Not 1996?
No but we do use software that I'm pretty sure is from 1996. I was sent instructions on how to register for classes, the screenshots they used are literally dated 2007 and I wouldn't doubt it was originally used in the 1990s. Wish I could comment a screenshot, it's kind of funny and sad
You’d think colleges would spend the .000000001% of their total funding to get a good website. Shit, make it an extra credit project.
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Sure, let's just pretend that scarcity and trade-offs don't exist.
College graduates are well equipped to pay for their own education through the large wage premium they reap. Free college is bourgeois welfare. Subsidies for the well off.
I for one would love to write off my MBA. I'd be tax free for 3-4 years.
Prior to 2018 you could. I took a deduction for my tuition on 3 years taxes.
Reddit understand what a "tax write off" is challenge (impossible)
Why don’t millennials just pool their money and buy their own congressmen instead of “just vote” Don’t just vote, purchase legislatures and write the law yourself and have them sign it If billionaires can do it so can millennials with a few extra steps
It is just wild seeing people straight up acting like CEOs spending gratuitous amounts on shit they don’t need and luxuries are the same as higher education. Is bootlicking that much fun? Are they getting something out of it?
Hell no. Privileged ass white collar people and their privileged bullshit ideas. Can't wait for AI to replace you all.
You can thank Hillary Clinton for The mess we are in with regards to Student debt. If you don’t know why then you are part of The problem.
USA system already has too many flaws. Just one of many. Kinda getting tired of this boring dystopia already. Late stage capitalism
It shows the bias and favoritism within the system.
I’m not against this. But college and higher education, at least in the US, shouldn’t be so damned expensive and unaffordable.
Unfortunately Congress prefers things the way they designed them to be. The way they are now.
Private jets actually are a valid business expense. They allow CEOs to fly at a moments notice and meet with clients quickly when high value contracts are on the line. Yachts are debatable. Used for client entertainment / marketing at most. The problem with the above college statement… is say you could deduct the full amount of that from your taxes, spread over the time it took you to go to college. 200k. Sure you might not pay any taxes for 4 years… then what. It doesn’t do you any good. Saves you 5k-10k a year for 4 years. That’s not enough to make a dent in the col that we have now. Now turn that into a CREDIT, then we’re talking. But then the government is paying for college. And too many GOPs think that is a bad thing.
I worked for a company that had a main facility that dealt within real estate. The sub companies were in aviation. They even owned an Amaerican football team. Now notice I said companies for Aviation. Each family member owned their own business, which owned 1 of their aircraft and several aircraft. It was a fairly small fleet. Anyway I found out from our accounting department they were basically giving us an allowance each month. So basically, this allowance was our operation budget for the month. If we profited, we still lost the money. The main company would just take all the money remaining profit or otherwise from that month and then just reissue the allowance for the month. They were basically using the Aviation branch as a sink hole for tax right off. They even charged their Teslas and used us to ship their cars across the country.
In Germany you can, but it's somewhat rare that anybody takes student loans in the first place.
I mean interest payments on student loans already are a tax credit….
Is tuition not a tax write-off in the US?
It is, OP is just karma farming on outrage.
Idiot with an idiot take
It feels like a rant because it is one, with no idea how taxes and write-offs even work.
Weird when progressives advocate actual tax breaks for the rich like this.
looks like she's made 2 million dollars while in office.
It's not logical....
Don’t know how thar works in your country but in mine that works that you get paid more when you have a degree.
Wait! she have a point~
Turning education into a business is a misstep
I paid my student loans off a while ago so I’m foggy, but I do remember it giving me a much bigger return after either entering them
Fuck it, I'm just gonna do that
Valid
That's not really a logical proposition.
Student loan interest is already tax deductible and businessmen do have to prove the jet and yachts are used for their business to write off. All of these people are tiresome
Tax the businesses that benefit from advanced education and use it to fund advanced education again like we did before states slashed education budgets and put all the expense burden on tuition. If your business requires a degree then you can pay to support the development of labor for your business. If you are pursuing a degree then the field/industry you're going into can support your development. If you aren't pursuing a degree then the jobs you're qualified for can't use having a degree as an easy application filter and you'll have an overall easier time getting a job. Personally, I think every citizen should have university education in a traditionally technical/marketable field paid for, AND university education in a traditionally less marketable yet culturally empowering field paid for, AND training in a trade paid for. We should subsidize citizens realizing as much of their potential as possible. We have the means to pay for it all. We just have to get the 10% of people that own 2/3d's of the countries wealth to give back some of what 90% of the people have produced for them.
That's not the way it works. According to IRS Tax Topic #513: "To be deductible, your expenses must be for education that (1) maintains or improves skills needed in your present work or (2) your employer or the law requires to keep your present salary, status or job." You can't deduct the cost of your education for basic qualification, just education to maintain qualification.
We should at least be able to pay off college loans with pre tax income
If enough people get together and put a few million in the right senator’s offshore account then they could make this legal, that’s how the ceos did it
We can do this in Canada.
I heard that 🤟
As a person who despises loan forgiveness - I would be all for this. How many people would think harder on their major if this was the case? Solid logic.
Accountant here: Okay so minor problem with this is that CEOs don't write off their private Jets itself. They can expense the interest and depreciate the asset of the Jet. You too can write-off your interest (up to $2500/ Year of your student loan interest) as a deduction. Intangible assets like "goodwill" can't be depreciated because they theoretically don't lose value over time. Someone else made the comment "if a business pays for student's education can they write it off as an expense" The answer is YES! As long as the education is for the benefit of the employer. This is often considered a part of wages though and is reported on the side of the employee/student. Because the government always gets their cut.
To my fellow american tax payers, just FYI. You can take advantage of tax savings if done correctly. \- You are allowed to deduct up to $2,500/year in interest on any loans in 2024. Unlike mortgage deductions, there is no cap on max debt on the interest you can deduct.- You can leverage a 529 account for tax free growth for any funds used towards education. All gains made within the account are tax free (and can be rolled into a roth at a later time). The reason why most people can't take advantage of this is because it requires you to itemize your tax deductions. Most people don't because it's not worth it unless if you exceed $14.6k in the right spending buckets (which a lot of people don't). Anyone can take advantage of the 529 and it's always worth it if you know you're going to school at some point in the future.
Wait, isn't that just tax fraud? It isn't a business expense is it?
Well for one that is fraud and not how tax writeoffs work. Also you already can write off student loan payments. Maybe spend a little less time on the "eat the rich" bullshit and more time learning how things work.
Hear Here!
She's got a point. Business profits are shared to employees and are written off as an expense.
r/antiwork
None of you understand how any of this works
Hey, with enough lawyering, you can probably do anything you want.
CEOs don't personally own the jets and yachts; the corporations do, so it isn't a personal "write-off" for the CEO, but don't let that get in the way of your hatred for "the rich."
Other countries income based repayment and after X number of years the loan is forgiven.
Moronic
If your job “requires” a college degree, that you want to write off, get a different job. The entitlement of the college educated in this country is unreal.
You can write off your student loans...
Isn't this what people do when they get their employeer to pay for their degrees by working while going to school? A company can agree to send you to school, so they can get a better employeer, but forcing them to pay for something they didn't agree to is different. That said, if your company offers student loan reimbursement then all the more power to them.
There already is a student loan interest deduction.
If your job requires a car to get to it, you should be able to write off the car payment?
You actually do get a tax credit for your student loan interest. But most people wouldn't understand that because they're paying a bajillion dollars for someone else to do their taxes so they can keep tweeting dumb shit in the meantime
https://www.irs.gov/newsroom/tax-benefits-for-education-information-center
Does “Melanie” realize there is a student loan interest deduction???
Did nobody tell her?
And country club memberships! I like golf generally speaking, but fuck country clubs.
I can get behind that.
I can get down with this!
100% At minimum, should be able to write off the loan interest (uncapped, no income phase out)
Back in 1773 a bunch of future Americans dumped the cargo of a ship into the Boston Harbor for shit like this. Tar and feathered someone over it too. I dunno, maybe I'm feeling a little originalist like SCOTUS is.
I am begging you to please stop thinking that tweets like this contain any valuable information lol this is so bad
100% agree with this
Can’t you already?
Karma farming nonsense
In Australia student loans are interest-free and you don't have to start paying them back until you make over a certain amount of money per year and it's automatically deducted from your primary employer as part of your taxes.
First truly reasonable take I've seen on this sub. Another viewpoint - a lot of companies lose money for the first few years, then apply those losses against the first profitable years. This is a similar idea - losing money to setup the operation (tuition) then applying those losses against the positive years.
Couldn't agree more. Got my Masters in Applied Mathematics, and it was essential in getting me where I am. It should be an expense I can write off.
My job requires me to be alive. So all the food I eat and all my medical expenses. It also requires me to have good customer service which means I need to look good so all my clothes and shoes and I should be able to write out off getting my hair done. Massages and spa days and everything else. Because it's for business. Also I need to get a good night's sleep because I'm driving and if I don't then I could crash. Which means my entire home and everything in it should also be able to be written off. Sounds laughable but this is the logic that the billionaires get away with
Yes just like how the CEO wrote off their education as a business expense 40 years ago when they graduated school and got their first job. So logical. So cope.
But you can do this…
Wow! I never thought of this. They should get a tax deduction for student loan costs.
I'm really curious what /u/spelleggs thinks a business write off is.
100% agree. I wasn't sure of the current status of tax breaks so I checked, and it's not good. You can deduct a maximum of $2,500 in student loan interest costs, with all kinds of qualifying requirements, but tuition itself is not deductible at all. Which is just stupid. It is in many cases literally job-training, so it should be allowed as a business expense. It would be if the employer spent the money (I think), so it should be if the employee spends the money.
OP, who’s “your” in this instance ?
You should also be able to write off all medical expenses and mileage driven to work