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Teachers on average spend $530 of their own money during the school year to pay for supplies, snacks for students and other classroom items.
Teachers and other educators can get a tax deduction of up to $250 for some of those costs as well as continuing education expenses.
Even better, they don’t have to itemize to get the tax break. Educator expenses are one of the so-called above-the-line deductions claimed directly on a Form 1040 or via tax software.
Educator expenses deduction enhanced
Congress made the tax break for educators a permanent part of the tax code in 2015.
Lawmakers also indexed the $250 maximum deduction amount for inflation. It didn’t change for the 2016 tax year, because of low inflation, but it could increase in future years.
What items are deductible?
Besides teachers, counselors, principals and aides can take the deduction if, for the tax year, they were employed at a state-approved public or private school system from kindergarten through grade 12, and worked at least 900 hours during the school year.
Educators can write off unreimbursed costs for:
- Computer and other equipment (including software and services)
- Supplementary materials used in the classroom
- Professional development programs
The IRS also applies its “ordinary and necessary” rule here. An item purchased for your classroom must be considered ordinary: something that is common and accepted in the education profession.
It also must be necessary: defined as helpful and appropriate, though maybe not required.
So buying a recording of “Death of a Salesman” to help drive home Arthur Miller’s points to your students would likely meet tax muster. But purchasing a new HD television, instead of watching on your school’s working-but-old set, may raise some IRS eyebrows.
Couples who share education careers could get a double break if they file jointly. However, each spouse is limited to $250 of qualified expenses.
What about home schooling? Sorry, but the tax law specifically states that costs for this type of instruction don’t count toward the educator expenses deduction.
Circumstances could limit expenses
In addition to the eligibility requirements on expenses, the IRS has set some other restrictions on what’s deductible.
The tax agency says when an educator uses any tax-favored funds to pay for his or her own schooling, those amounts must be subtracted from the total the teacher claims under the educator expenses deduction.
Take for example Joe Jones, a high school English teacher who is working toward his master’s degree in literature during school breaks. He cashed in savings bonds to pay his tuition and excluded the bonds’ $150 interest from tax. He also spent $200 for books on Shakespeare to distribute to his 11th-grade students. He must subtract the $150 in tax-free interest from the $200 for the books, leaving him only $50 to claim under the educator expenses deduction.
The same rule applies to nontaxable earnings a teacher gets from qualified state tuition programs or tax-free withdrawals from a Coverdell education savings account.
Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York. He provides guidance and strategies to improve clients’ financial well-being.