Back to School Tips: Tax Deductions for Teachers

A sad aspect of America’s educational system is that, despite the fact that schools are often helped out financially by fundraisers and parent donations, their budgets remain small, requiring teachers and other school staff to frequently buy supplies and equipment in order to properly educate their students.

The good news, however, is that the IRS recognizes this issue and offers a tax deduction to lower the tax liability for teachers, principals, counselors, and aides to offset the cost of these purchases.

The tax deduction allowed for educators is $250 in qualified expenses per year. If you are married, filing jointly, and your spouse is also a teacher, aide, counselor or principal, he or she can also deduct up to $250 per year for eligible expenses, giving you a total deduction of $500 for the year. Note that neither of you can deduct more than $250 a piece, even if the total is less than $500.

Qualifying for the Educator Expense Deduction

As with anything, the IRS has rules and guidelines to regulate who may use this deduction and for what they may use it. For example, similar to tax-deductible business expenses, the expenses that you deduct must be directly related to your profession and you cannot have been reimbursed for those items already. Some examples of things that you can deduct for the Educator Expense Deduction include pencils and other classroom supplies, books, computers and education-related software, and balls or other sporting equipment used for physical education classes. The items must be ordinary and necessary, so you will not be able to get away with deducting a caviar service for two or a case of your favorite wine.

In order to qualify, you must be an instructor, aide, principal or counselor in a public or private school, as defined by law, for kindergarten through 12th grade. In addition, you must have worked no less than 900 hours during the school year or approximately 22.5 hours per week in a 10-month school year.

There are some additional restrictions that apply. For example, you may only deduct expenses if they exceed:

• Interest received on any qualified U.S. savings bonds that you excluded from income on your tax return because you paid qualified higher education expenses
• Distributions taken from a qualified tuition program that you excluded from your income amount on your tax return
• Tax-free withdrawals that you took from your Coverdell Education Savings Account.

Claiming Your Educator Expense Deduction

If you plan to take the $250 per year Educator Expense Deduction, be sure to keep good records throughout the year. Store all of your receipts for eligible purchases in a file – or, better yet, scan them into your computer and store the image on both your hard drive and on a backup storage device. Although you do not need to list each expense individually on your tax return, you will need the total amount of your deductible expenditures as a backup in the event that you are audited.

When you file your tax return, claim the Educator Expense Deduction on Form 1040 (line 23) or Form 1040A (line 16), being sure not to exceed the $250 per person limit. This deduction will lower your tax liability for the year, which may lead to a smaller bill or larger refund at tax time.

Additional information about deductions and other tax questions can be found in Your Federal Income Tax, Publication 17, but any time that you are unsure whether or not you qualify for a deduction, it is a good idea to consult a tax professional.