Are Continuing Education Expenses Tax Deductible for Mental Health Professionals?

By Heard

This blog post was written by our sponsor, Heard, as part of a paid partnership with CEU Creations and CE4Less. While CEU Creations and CE4Less do not receive any commissions or fees from the sale of Heard’s services, we are sharing this content to provide helpful financial insights for mental health professionals. As always, please consult with a licensed tax professional for advice specific to your situation.

If you’re a mental health professional, continuing education can help you maintain your license, upgrade your certifications, keep on top of new therapeutic methods, and better serve your clients.

And if you’re self-employed, the cost of continuing education is generally tax deductible. Here’s what you need to know.

What types of continuing education are tax deductible?

Not all types of education as a therapist are tax deductible, but many of them are.

Here’s a good rule of thumb: Once you’ve achieved the minimum level of education and supervision necessary to become licensed as a therapist in your state, any education you pay for beyond that point is tax deductible.

For instance, you can write the cost of the following off your taxes:

• Post-secondary courses beyond those needed to become licensed as a therapist
• Online courses
• Seminars and workshops
• Professional retreats
• Professional conferences
• Clinical training

These are all examples of deductible continuing education expenses because they allow you to upgrade your skills as a therapist.

On top of these, you can deduct the cost of:

• Books and supplies purchased for the sake of pursuing continuing education
• Additional services like note-takers and tutors

In some cases you may also be able to deduct the cost of business travel as a therapist. For instance, if you travel to a professional conference or retreat, the cost of travel is typically tax deductible. 

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“Continuing education is tax deductible as long as you’re pursuing additional training after being licensed as a therapist.”

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When is continuing education not tax deductible? 

Remember that rule of thumb: Any education as a therapist beyond the education you need to be licensed in your state is tax deductible.

That’s because it’s continuing education—emphasis on continuing. 

The cost of going to school to get the necessary credentials to become licensed in your state is not tax deductible.

In that case, it isn’t continuing education you’re paying for. Technically, when you’re pursuing your degree, you’re not a therapist yet—so you don’t have a profession you’re continuing to be educated in. 

Similarly, if one day you decide you’d like to quit being a therapist and train as a pastry chef, you can’t deduct the cost of culinary school. You’re no longer continuing your education as a therapist. You’re getting the foundational education necessary for an entirely new profession.

Are student loans for therapists tax deductible?

Typically, the cost of repaying your student loans is not tax deductible.

That’s because, when you paid your tuition with student loans, you were paying for foundational education in your field as a therapist. You were not yet a practicing therapist, so your education was not continuing education.

However, you may be able to write off the cost of interest you pay on student loans.

How to deduct student loan interest from your taxes

If, over the course of the year, you pay $600 or more in student loan interest, you can write the amount of your taxes.

When you pay over $600 in student loan interest, your lender is required to send you a copy of Form 1098-E, which lists the total amount you paid.

You then use the IRS student loan interest deduction worksheet to calculate the amount of the deduction, and write it off as an adjustment to your adjusted gross income (AGI) on your tax return.

There are some limitations. For starters, you can only write off up to $2,500 in student loan interest per year.

And you only qualify for this write-off if your modified adjusted gross income (MAGI)—your AGI, minus write-offs—is $85,000 or less.

Keep in mind that the student loan interest write-off is not a business tax deduction; it’s a personal tax deduction. You report it on Schedule 1 of Form 1040 (your personal tax return).

Is clinical supervision for therapists tax deductible?

Clinical supervision you pay for in the course of pursuing foundational education as a therapist is not tax deductible. 

In that case, the usual logic applies. Since you aren’t a licensed therapist at the time you pay for the supervision, it does not count as continuing education.

However, if you decide to pursue additional licenses (more on that in a moment), and the cost of that education is tax deductible, you can deduct what you pay for clinical supervision as a continuing education expense.

Can you deduct the cost of training for a new license as a therapist?

Suppose you’re a Licensed Clinical Social Worker (LCSW), and you’d like to train as a Licensed Marriage and Family Therapist (LMFT). In that case, you may wonder: Is the cost of your education to become an LMFT tax deductible?

There are two schools of thought on this.

On the one hand, by training as an LMFT, you are expanding the types of services you can offer clients as a therapist.

On the other hand, some might argue that training as an LMFT gives you the foundational education you need to practise a new profession—that of a marriage and family therapist, as opposed to a clinical social worker. 

This is something of a gray area. Your personal situation and goals have an impact on whether you would be able to write off your LMFT education.

If you’re really banking on being able to write off the cost of a new license, consult with a tax professional before pursuing further education. They will advise on whether you will be able to claim the expense on your tax return.

How to deduct continuing education expenses from your taxes

If you operate as a sole proprietor, you can deduct the continuing education expense on Schedule C of Form 1040.

If you have elected S corporation status, you can deduct it on Form 1120-S.

As with all tax deductions, make sure you have records—like receipts or other proofs of purchase—to support your claim. If the IRS audits you, and you’re unable to prove you qualified for those deductions, you could be required to pay back the deducted amount. Or even, in extreme cases, be convicted of fraud.

The statute of limitations on tax returns is three years, or six if the IRS audits you and determines that fraud was committed. So plan on keeping your receipts on file for six years.

Key takeaways

• Continuing education is tax deductible as long as you’re pursuing additional training after being licensed as a therapist.
• The cost of the education you need to be licensed in your profession is not tax deductible, and neither is the cost of training to enter a new profession.
• You can’t typically write off the cost of student loans, but if you pay $600 more in student loan interest over the course of the year, you can write that interest off as an adjustment on your personal tax return.
• There’s a gray area when it comes to the continuing education deduction and training for additional licenses as a therapist. Consult a tax professional before making any major decisions.
• Keep all records of continuing education expenses you claim on hand for six years after filing your taxes.

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