Coding bootcamps are growing in popularity as employers and students continue to recognize how effective immersive, skills-based training can be in the tech industry. While these programs are generally a cheaper alternative to degrees, they can be fairly costly, which leads many students to wonder: are coding bootcamps tax deductible?
Whether or not your coding bootcamp is tax deductible depends on a number of factors, which we will dive into in this article. In addition to learning how you can deduct a coding bootcamp, you’ll also learn about the variety of payment methods that can make bootcamps more affordable.
- Coding bootcamps can be tax deductible but only under specific circumstances. For example, bootcamps aimed at career enhancement tend to be more likely to be tax deductible.
- Employer-mandated training and its impact on your job or salary can influence tax deductibility.
- Using a 529 plan to pay for coding bootcamps is not permissible due to accreditation constraints.
- Deductibility hinges on meeting IRS criteria for work-related education and serving your current job’s skill demands.
- Be cautious of new career-focused training or training after a significant work gap, as these might not qualify for tax benefits.
- Coding bootcamps offer various financing methods, including installment plans, loans, deferred tuition, scholarships, and income share agreements.
Is a Coding Bootcamp Tax Deductible?
Yes, a coding bootcamp is tax deductible under certain circumstances. In general, coding bootcamps can be considered tax deductible if your employment or salary will be adversely affected without the course, if the training was mandated by your employer, and if your goal is to maintain or improve your current abilities rather than qualify for a new career.
For coding bootcamps to be tax-deductible, the following criteria have to be true:
- Your status, job, or salary is affected if you don’t get the training.
- You’re getting training to improve an existing skill rather than to learn a new one.
- You aren’t taking the course to meet minimum educational requirements.
Who Required You to Take the Course?
Intent is an important part of determining whether a bootcamp course is deductible. If you enroll in a bootcamp because you’re looking for a new job, you won’t be able to claim your tuition. If your reason for taking a programming bootcamp class is personal and not related to your current employer, you’re going to be on the hook to pay for your classes.
However, if your employer is the one who requires the training, it doesn’t necessarily mean your bootcamp is automatically tax deductible. The following criteria also come into play.
Are You Maintaining Your Skillset or Building a New Skillset?
If, for example, you are a newcomer to the tech industry and have no professional experience with programming, your bootcamp won’t be tax deductible.
The IRS website specifies that courses that qualify as tax-deductible work-related education must improve upon the skills you need for your current employment. Examples given include refresher courses and classes on current developments in your field. Basically, the course has to serve a bona fide purpose to your employer.
Is the Course Required to Meet Minimum Educational Requirements?
For your bootcamp to be tax-deductible, the training you receive can’t be seen as the minimum requirement someone would need to work in your role. This ties closely with the criteria that the purpose of the bootcamp can’t be for you to learn new skills.
Can You Use a 529 Plan to Pay for a Coding Bootcamp?
No, you can’t use a 529 plan to pay for your bootcamp. Because most coding bootcamps are not accredited and their students aren’t eligible for federal student aid, tax deductions for bootcamp tuition are a bit more complicated than what you will find with accredited educational institutions like universities and trade schools.
Coding Bootcamp Financing Methods
Coding bootcamps usually cost between $7,000 and $20,000, which can be a major investment. Since most students enroll in a bootcamp to launch a new career, this tuition is not generally tax-deductible. However, it is important to remember that coding bootcamps offer a wide range of financing options to help keep tuition manageable. Some of the most common bootcamp financing methods include:
- Installment plans. Installment plans lessen the burden of tuition by allowing students to pay in smaller installments throughout their training instead of being responsible for the entire cost upfront.
- Loan financing. Private student loans are very common among bootcamp students. Most major schools partner with major providers like Climb Credit and Affirm to offer financial assistance to students.
- Deferred tuition. With a deferred tuition plan, students pay tuition in predetermined installments after they have completed their training.
- Scholarships. Many coding bootcamps offer significant scholarships and discounts to students with financial needs or who belong to groups that are traditionally underrepresented in the tech sector.
- Income share agreements. Income share agreements allow students to complete their training for free, then pay back their school with a portion of their future salary for a set period of time.
Are Other Online Courses Tax Deductible?
Yes, online courses can be tax-deductible. An online course has to meet all the same criteria as a coding bootcamp to be deemed eligible. It needs to improve upon the skillset you are currently using in your career. In other words, if the course is to learn a completely new set of skills or to launch a new career, it is unlikely to qualify.
Who mandated the training is also important. If your employer requested that you take the course, then it is much more likely to be tax deducible. Aside from these concerns, It’s crucial to note that deductions depend on complex IRS regulations and individual circumstances. Consulting a tax professional is advisable to navigate these intricacies and ascertain whether your specific online course expenses are eligible for deductions.
Coding Bootcamps and Taxes
Overall, the answer to the question of whether or not your coding bootcamp is tax-deductible depends on your situation. Employer-mandated training can only be tax deductible if, among things, you’re getting training to build on an existing skill. If you’re getting training on a new skill or something that can be used in a new career, your bootcamp won’t qualify.
You’ll have to meet specific requirements for your coding bootcamp to fall into the tax-deductible territory. You’ll need to make sure that you’re working while you get the training, for starters—training you start after having been off work for a year or more is all on you. You’ll also have to tread carefully if your training gives you access to different clients. Any education that qualifies you for new business won’t qualify as tax deductible.
Coding Bootcamps & Tax Benefits FAQ
Professional certifications can be tax deductible. If the certification enhances your existing job skills and if your employer requested it, you could be eligible for tax benefits. Always consult IRS guidelines and a tax expert for specifics.
Yes, continuing education courses can count toward your taxes, depending on your situation. Courses required by your employer or those that improve your ability to perform in your current position are often tax-deductible.
Coding bootcamps cost an average of $12,953, according to Career Karma’s 2023 Bootcamp Market Report. However some bootcamps are completely free and others cost over $20,000, so it depends on the school you choose and your learning format.
After a coding bootcamp, you can apply for a range of jobs in the tech industry. Some of the most common options include web developer, software developer, data scientist, XU/UI designer, and cyber security engineer.
About us: Career Karma is a platform designed to help job seekers find, research, and connect with job training programs to advance their careers. Learn about the CK publication.