HealthFebruary 14, 2023

Is continuing medical education tax deductible? Navigating CME credits amid tax season

Continuing medical education (CME) is crucial for clinicians to stay current on the latest medical advancements. Get the essential information for US tax deductions for CME credits.

Editor’s Note: This article is intended to provide helpful information for healthcare professionals working in the US tax system and should not be considered tax advice. Please contact a tax professional to understand the full details of your CME expenses and deductions.

Heading into tax season each year, most clinicians are hoping to make as many work-related deductions as possible. But is continuing medical education tax deductible? Like most tax questions, the answer depends on several factors. All healthcare professionals should ensure they adequately track their continuing medical education (CME) credits, however, because doing so could yield significant savings on their tax bills.

Let’s start with the basics.

Employment status and continuing medical education tax deduction

CME expenses that relate directly to your current job or profession and that aren’t reimbursed may qualify as a miscellaneous itemized deduction.

But eligibility depends on your employment status:

  • If you’re self-employed—such as a private practice or locum tenens clinician—you can deduct costs for obtaining CME credits as ordinary and necessary business expenses, provided they meet certain requirements.
  • If you’re employed by a healthcare system or organization, you cannot deduct CME expenses from tax years 2018 through 2025. Why? The Tax Cuts and Jobs Act of 2017 eliminated the miscellaneous itemized deductions—including CME credits—for this time period.

Keep in mind that, regardless of your employment status, you can’t deduct CME costs for which the healthcare organization has already reimbursed you.

What kind of CME credits count towards deductions?

The next step is to determine whether the CME program qualifies for a continuing medical education tax deduction. To qualify, it must either:

  • Maintain or improve skills required for your current position, or
  • Be necessary to maintain your current employment status or rate of compensation.

If they don’t apply directly to your profession, continuing education expenses are not tax deductible. If a cardiologist is an amateur historian, for example, she cannot deduct costs related to a seminar on the treatment of battlefield infections during the Civil War. She likely could deduct educational courses or audio lectures on polypharmacy or congenital heart disease, however.

If your education is work-related, you can deduct an array of expenses, including solutions with built-in CME credits, tuition/registration fees, books, supplies, labs, and, in some cases, travel costs. If you’re traveling for both personal and business reasons, you should prorate your costs and only deduct qualified expenses.

While it doesn’t constitute as official advice, the IRS’ interview-based tool can help you determine whether your CME expenses are deductible.

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IRS provisions to keep in mind

Costs associated with travel, meals, and lodging for work-related education are deductible like any other business expense. However, the percentage of meal costs you’re allowed to deduct varies. Food and beverages from a restaurant were 100% deductible in 2021 and 2022, for example, but only 50% in prior and subsequent years. If this seems confusing, it is. Consider talking to a tax professional to learn how much you can and cannot deduct each year.

The same IRS rules that apply to other business expenses apply to CME credits. Here are two of the most important:

The 2% rule

Miscellaneous itemized deductions—which include non-reimbursed CME expenses—must exceed 2% of your adjusted gross income (AGI), and you can deduct only the amount over that 2% threshold. For example, if your adjusted gross income is $200,000, and you have $6,000 in CME expenses, you may deduct only the $2,000 that exceeds 2% of your AGI.

The “ordinary and necessary” rule

The IRS states that a business expense is deductible only if it is ordinary and necessary. That doesn’t mean it’s indispensable to your ability to practice; it merely needs to be normal and appropriate.

Claiming your CME deductions

Just as you need to track your CME credits, you must also carefully record your expenses. Maintain accurate records and hold onto receipts in case the IRS asks you to support or prove your claim for a continuing medical education tax deduction.

Once you’ve tracked your eligible work-related education expenses, you can deduct them from your total business income on a Schedule C (Form 1040) or Schedule F (Form 1040). For those forms, treat travel and meals as any other business expense.

Not every CME opportunity involves travel, of course, and some platforms will log the CME credits you earn by using clinical decision support during practice, reading journals, listening to lectures, or watching videos. Keep all your receipts just in case.

It’s always best to consult a tax professional for specific advice on whether your CME expenses are deductible and, if so, how to claim them on your tax return. Ideally, you want someone with tax and accounting expertise, as well as a deep understanding of how CME works.

Additional US tax information in this article was provided by CCH AnswerConnect. Tax professionals can explore resources and solutions in the Tax & Accounting US Hub.

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