Checkmark iconCan I Write This Off?

Is is executive coaching tax deductible tax deductible?

TL;DR

Executive coaching can be tax deductible if it is directly related to your trade or business and helps improve skills necessary for your current role. However, it is not deductible if it is intended to qualify you for a new trade or business.

Detailed Answer

The cost of executive coaching is deductible as a business expense if it maintains or improves skills required in your current business or trade. For example, if a small business owner hires a coach to enhance leadership skills directly related to managing their existing business, this expense is deductible. However, if the coaching is intended to prepare the individual for a new career or business, it is not deductible. Deductibility also depends on whether the coaching is ordinary and necessary for the business, as defined by IRS guidelines. It's important to distinguish between personal development and business-related skill improvement.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors or Schedule E for partnerships and S corporations.

Real World Example

A freelance marketing consultant pays $2,000 for executive coaching to enhance negotiation skills, which are crucial for securing contracts with clients. This expense is deductible on Schedule C, Line 27a, as it directly relates to improving skills necessary for their current business.

Audit Risk & Documentation Tips

The audit risk is moderate. To defend this deduction, keep detailed records such as invoices from the coaching service, a description of the coaching program, and documentation showing how it relates to your current business activities. Maintain a log of coaching sessions and any materials or outcomes that demonstrate business relevance.

IRS Reference

IRC §162; IRS Publication 535, Business Expenses

Relevant Industries

ConsultantsSmall Business OwnersFreelancersExecutives

Popular Related Pages

Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 25, 2025

Back to Search