Coaching Tax

Is Coaching Tax Deductible?

Great question. The short answer is: it depends. Let’s separate these two types of coaching to answer this question. While Leadership Coaching and Executive Coaching are by nature career coaching, the reversal isn’t necessary the same. The type of coaching delivered in these two cases makes a difference in answering the question. Business owners can receive executive and leadership coaching, but so can emerging leaders working for an employer.

Let’s take a look at a few scenarios below.

Can I Justify Business Coaching or Leadership Coaching as a Tax-Deductible Expense?

Leadership or business coaching can be tax deductible if the coaching focuses on the professional aspect of the coaching client and if the service impacts the client’s work in or on the business. The coaching engagement needs to show a correlation of the coaching of the leader and the impact on the business, i.e. improving the performance of the business unit or the company at large.

Giving a few examples, a leadership coach can help with:

Company vision, mission, and strategy
Communication skills to improve relationships with employees and clients
Company branding and company values
Strategic problem-solving
Improved decision-making
Succession planning and talent development
Conflict resolution
Productivity (and more)

Please consult your accountant come tax time to inquire about the latest status regarding tax reliefs, exemptions, and tax deductions.or b

Is Career Coaching Tax Deductible?

For career coaching to be tax deductible, it would have to focus on the business aspect.

“To be fully tax-deductible, your coach must solely advise you on matters of business. If however, […] a coach […] advises you on both business and personal matters, only the business portion of their fee would be tax deductible.” (Source)

In the case of career coaching, you may be able to argue that it is benefiting the business if it is developing skills that impact business success. Speak with your tax accountant to see if your specific coaching agreement warrants a tax deduction.

Do Employers Pay For The Cost Of Coaching?

Another option to look for support of the cost of your coaching is to consider working with your employer. To convince an employer to chip in on the cost of your coaching engagement would require that you build a case that shows the impact it will have for them. The good news is: coaching has shown a lot of positive impact on businesses, namely:

Benefits of Coaching for Businesses

A Fortune 500 company did a study on the ROI of Executive Coaching and found:

77% of respondents stated coaching significantly impacted at least one business measure
Overall productivity, employee satisfaction, engagement and quality improved
Overall, Executive Coaching produced a 788% ROI

The Harvard Business Review showed in an article that three stock portfolios comprised exclusively of companies that invest in employee development outperformed the S&P 500 by 17-35%.

The International Coach Federation (ICF) reports that “leaders who participated in coaching saw a 50% to 70% increase in work performance, time management, and team effectiveness.”

Other studies support these metrics further:

6X average ROI on the cost of executive and career coaching
53% improved executive productivity
70% enhanced direct report/supervisor relationships
67% improved teamwork and 63% working relationships with peers

Writing A Request To Your Employer

If you believe your employer would support your desire for coaching, you can put together a formal letter explaining the type of coaching you want to sign up for. It matters greatly that you relate your request for support back to the business impact.

1. Check Employer Programs

Find out what types of programs, education, or coaching your employer supports. Some employers have budgets for talent development initiated by the employee. Speak with HR about the qualification requirements, limits and process to apply for support.

2. Build Your Case

Put together the points that need improvement and how coaching will help.
Highlight the benefits to your work an to the business.

3. Confirm Your Commitment

Reassure your employer that you are committed to use their support to support the business – and not to take advantage and leave after your engagement is done. Explain how you intend to use your skill-building to benefit your company. State your intention to be accountable and to report during or after the program how this has impacted your work for them as a return on their investment in you.

4. Make Your Request

Express your appreciation for the willingness of your employer to consider your request.
Display the options you have explored – or the 2-3 strong reasons you suggest one option.

You can get a free template below and modify it (via Google Docs).