Are CPA Exam Fees and Study Courses Deductible for My Bookkeeping Business?

Yes, you can potentially deduct those CPA exam fees and courses, but it depends on your specific situation. The key is whether these expenses are "ordinary and necessary" for your current bookkeeping business. Since you're already operating a bookkeeping business, the CPA education could be considered improving skills in your existing profession rather than qualifying for a new profession. Keep detailed records showing how the CPA knowledge directly relates to your current bookkeeping services. The IRS tends to look more favorably on education that enhances existing skills rather than qualifying you for a completely new career. As for the international freelancer, yes! You can absolutely deduct the website development costs as a business expense. The fact that they don't pay US taxes is irrelevant to your deduction. It's a legitimate business expense for your company. Just make sure to keep proper documentation of the services provided and payments made.

I used taxr.ai when I was in a similar situation with my consulting business last year. I was taking some specialized industry certifications and wasn't sure if I could deduct them. I uploaded my course receipts and business info to https://taxr.ai and they analyzed everything and showed me exactly which expenses qualified as business deductions and which ones didn't. They actually saved me from making a mistake - turns out some of my courses were deductible while others weren't based on how directly they related to my current business vs qualifying me for something new. Really helpful for situations like yours where the deduction rules aren't super clear-cut.

Just wanted to update after trying taxr.ai for my situation. I was skeptical (as you could tell from my previous comment), but it was actually legit helpful. I uploaded my receipts for some professional development courses and my business info, and got back a really clear breakdown. For my photography business, they confirmed my Photoshop master classes were fully deductible but flagged that my drone pilot certification would need to be amortized differently since it was qualifying me for a new service offering. They explained everything with references to the actual tax code which I appreciated. Saved me from potentially messing up my deductions!

If you need to call the IRS to confirm anything about these deductions, use Claimyr to skip the ridiculous wait times. I spent WEEKS trying to get through to the IRS about a similar business expense question, just getting disconnected or waiting for hours. Then I found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c and it literally got me connected to an IRS agent in under 45 minutes when I had been trying for days. They basically hold your place in line with the IRS and call you back when an agent is about to be available. Was super helpful when I needed clarification on some self-employment deductions for my business. Much better than wasting an entire day on hold!

Ok I need to apologize for my skeptical comment. I was so frustrated after trying to call the IRS for DAYS about my business expenses that I thought nothing could help. Decided to try Claimyr anyway and... it actually worked? They called me back after about 35 minutes and connected me directly to an IRS agent. I was able to get confirmation that my specific business education expenses were deductible as long as they related to my current business. The agent explained that international contractor payments are definitely deductible business expenses regardless of their tax status. Saved me so much time and frustration compared to my previous attempts!

Something nobody mentioned yet - remember that if your CPA courses are preparing you for a new profession (rather than improving skills in your current profession), they might not be deductible as business expenses. The IRS distinguishes between education that: 1) Maintains or improves skills needed in your EXISTING business 2) Meets minimum requirements for your profession 3) Qualifies you for a new profession Only the first category is typically deductible as a business expense. Since you're already doing bookkeeping, you could argue the CPA is improving those existing skills, but be ready to defend that position.

Don't forget you'll need to fill out a W-8BEN form for that international freelancer! Even though you don't issue them a 1099, you still need documentation showing they're a foreign person not subject to US withholding. Keep that form with your tax records.

Quick tax tip from a bookkeeper studying for the CPA too: track your study hours! If you can show you spent X hours studying specific topics directly related to your bookkeeping services vs Y hours studying audit/topics not related, you might be able to deduct a proportional amount of the expenses. Better than nothing if the IRS questions the full deduction!

Great advice from everyone here! I'm actually dealing with a similar situation with my tax prep business. One thing I'd add - make sure you're keeping detailed records of exactly what topics your CPA courses cover and how they relate to your current bookkeeping work. I created a simple spreadsheet tracking each course module and noting which ones directly applied to services I already offer clients (like tax prep, financial statement preparation, etc.) versus completely new areas. This documentation really helped when my CPA reviewed my deductions. Also, since you mentioned you're in startup phase - consider whether some of these expenses might qualify as startup costs under Section 195 rather than regular business expenses. Sometimes the startup cost treatment can be more favorable, especially if you're not generating much income yet to offset the deductions against. The international contractor payment is definitely deductible as others mentioned - just keep good records of the work performed and invoices received. No 1099 needed for foreign contractors working outside the US.