Taxes: Deducting Educator Expenses

If you are working with students between kindergarten and twelfth grade, you may be able to deduct education-related expenses you incurred. Read this article to find out how.

Most people acknowledge that many teachers in this country are woefully underpaid. While this is bad enough, what can be even more discouraging for the dedicated teacher is when the school doesn't have the funds for the proper materials and supplies for the school itself. Sometimes educators even find themselves paying out of their own pocket for books and equipment for their students and their classroom. The IRS recognizes that this is a problem, and has accounted for this by allowing qualified educators to deduct up to $250 of educator expenses from their income.

In order to be eligible for the educator expense deduction, you must work at least 900 hours per year in a school setting, kindergarten through grade 12. This means college teachers and assistants are out of luck, as are pre-school teachers. Educators don't necessarily have to be only teachers - if you are a teaching aide or assistant, a counselor, an instructor, or even a principal, you qualify as an eligible educator. Unfortunately, if you are a custodian or a secretary to the principal, you don't qualify.

Expenses which you can count toward your deduction must be directly related to use in the classroom, and must be, in the words of the IRS, "ordinary and necessary." These can include books, supplies, computer equipment and software, maps, slides, prizes for in-class educational games - virtually anything that has to do with educating your students, so long as the expenses are not reimbursed by the school. If you are reimbursed for any part of the expense, you may not count that part of the expense toward the deduction. For example, if you spent $75 on books for the classroom, and the school reimbursed you for $50 of it, you would only be able to claim $25 toward the deduction. Remember, the expenses must also be ordinary - meaning they are common for your educational field - and necessary - simply meaning helpful and appropriate. One major exception to the rule of educator expenses is for physical education teachers. In this case, expenses have to be related to athletics - buying a globe for your office does not count, even if you are training your students for the Olympics.

As usual, there are limits and restrictions on the amount that you can deduct. First, the $250 limit is per educator - meaning that even if you are married filing jointly and you and your spouse are both qualified educators (raising the deduction to a maximum of $500) each of you can only deduct up to $250, even if this means you are below the $500 limit. Besides the $250 limit, the educator expense deduction is reduced by any distribution from an education savings account or qualified tuition program that was tax-free or you excluded from your reported income. You also must subtract from the $250 limit any interest from certain U.S. bonds that you excluded from your income (if, for example, you used the bonds to pay for higher education expenses, that interest is excluded from your income - this interest must also be subtracted from your $250 deduction limit). For more information about limitations on the educator expense deduction, or if you have any questions about what expenses are eligible, see IRS Topic 458 or speak with a tax professional.

If you do qualify for the deduction, it is easy to claim. An advantage of the educator expense deduction is that you don't have to itemize your deductions to qualify for it - there is a line for it right on Form 1040. Even though you don't have to itemize, you do need to keep careful records. Make sure you keep all the receipts you collect for any classroom-related expenses, something many people who don't itemize deductions aren't in the habit of doing. Keep a record of each receipt: the date, what it was for, and how much you spent; put these in a well-marked envelope and keep them with a copy of your tax return should the IRS come calling.

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