Parents juggling side hustles and family life may wonder if training costs for skill-building are tax-deductible. This article explores IRS rules for deducting education expenses, eligibility for self-employed parents, and allowable costs like course fees and travel. Learn how to maximize deductions while avoiding pitfalls, such as expenses for new careers, to reduce tax liability.
Understanding Tax Deductions for Side Hustle Training Costs
For parents balancing childcare and a side hustle, enhancing skills through training can boost income and flexibility. But can these training costs be deducted on your taxes? The IRS provides specific guidelines on what qualifies as a deductible education expense, particularly for self-employed individuals, which many side-hustling parents are. Let’s break down the rules, eligible expenses, and key considerations to help you navigate tax deductions effectively.
The IRS allows self-employed individuals to deduct work-related education expenses as business expenses on Schedule C (Form 1040) if they meet certain criteria. According to IRS Topic No. 513, the education must either maintain or improve skills required in your current trade or business or be required by law or regulation to keep your professional license or status. For example, a freelance graphic designer taking a course on advanced Photoshop techniques to enhance their services can likely deduct the cost, as it directly improves skills used in their existing business. Similarly, a parent running a tutoring side hustle who takes a course to refine teaching methods could claim the expense.
However, there are strict limitations. The IRS explicitly states that education expenses are not deductible if they qualify you for a new trade or business or are needed to meet the minimum educational requirements for your current trade. For instance, a parent with a side hustle as a rideshare driver cannot deduct the cost of a driver’s education course, as it’s considered a minimum requirement for the job. Likewise, a freelance writer taking a coding bootcamp to pivot to software development cannot deduct those costs, as it prepares them for a new career, even if they don’t intend to switch fields immediately.
Eligible expenses extend beyond just course fees. Self-employed parents can deduct costs like books, supplies, and transportation related to the training. For example, if you travel from your home office to a local workshop to improve your side hustle skills, you can deduct public transportation fares or mileage (at the 2025 standard mileage rate of $0.70 per mile). Research and typing expenses, such as costs incurred while preparing coursework, are also deductible. However, travel as a form of education—say, a trip abroad to learn a language—is not allowed, even if it indirectly benefits your business.
For parents working side hustles while employed elsewhere, the rules differ. Employees can no longer deduct unreimbursed job-related education expenses as itemized deductions due to the Tax Cuts and Jobs Act, which suspended this provision from 2018 to 2025. However, if you’re a school coach or teacher spending personal funds on team-related supplies, you may qualify for the Educator Expense Deduction, allowing up to $300 in unreimbursed expenses, provided you work at least 900 hours at a state-certified school.
Another option for parents is the Lifetime Learning Credit (LLC), which offers up to $2,000 per tax return for qualified education expenses, including courses to improve job skills. Unlike deductions, the LLC has income limits—$90,000 for single filers or $180,000 for joint filers in 2025—and requires a Form 1098-T from the educational institution. Parents pursuing a part-time degree related to their side hustle may qualify, but the credit phases out for higher earners.
To maximize deductions, meticulous record-keeping is crucial. Keep receipts, bank statements, invoices, and course descriptions to prove the training’s connection to your side hustle. For instance, a parent running a bookkeeping side hustle who takes a QuickBooks certification course should retain the certificate of completion and payment records. Using tools like Driversnote for mileage tracking or accounting software like FreshBooks can simplify documentation.
Be cautious of common pitfalls. The IRS disallows deductions for courses that provide a “lasting benefit,” such as those leading to a degree or professional qualification that could qualify you for a new career. For example, a parent with a photography side hustle cannot deduct a marketing course, as it’s not directly related to their current skills, even if it could attract more clients. Consulting a tax professional can help clarify whether specific courses qualify, especially for complex cases like MBAs, where Tax Court rulings have allowed deductions if the degree enhances existing skills without preparing for a new profession.
For stay-at-home parents, side hustles like tutoring, photography, or virtual assistance are popular, and training to maintain or improve these skills can often be deducted. For instance, a parent offering online tutoring through platforms like Wyzant could deduct the cost of a pedagogy workshop, as it directly enhances their current services. Similarly, a parent running a childcare side hustle might deduct a first-aid certification course if required by state regulations.
Ultimately, parents must ensure the training is closely tied to their existing side hustle and not a stepping stone to a new career. By understanding IRS rules and maintaining thorough records, you can leverage these deductions to reduce your tax burden, leaving more income to support your family and grow your side hustle.
Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Consult a tax professional to assess your specific situation before claiming deductions. Information is sourced from IRS publications, tax professional websites, and general financial resources.
