The IRS increased the expense deduction for teachers by $50. While this is not earth shattering, at least it is a step in the right direction. We like to share good news whenever we can.
The Basics of the Educator Expense Deduction
Teachers and other educators may now deduct up to $300 of out-of-pocket classroom expenses for 2024 when they file their income tax returns. This is the first time the annual limit has increased since the educator expense deduction was enacted in 2002. Educators can claim the educator expense deduction on their federal tax return. The limit was previously $250 per year.
Teachers can deduct expenses that are not reimbursed by their school or other sources.
If two teachers are married to each other and they file a joint tax return, the limit rises to $600. However, the deduction is still limited to $300 for each spouse.
Educator tax deductions are available regardless of whether the teacher itemizes or takes the standard deduction. The deduction limits have changed over different tax years, so it’s important to check the specific limits for each tax year.
Who May Claim the Educator Expense Deduction on Their Tax Returns? Eligible Educators
Only an eligible educator may benefit from the education expense tax deduction on their tax returns. An eligible educator includes:
- Teachers (kindergarten through grade 12)
- Instructors
- Counselors
- Principals
- Aides in a school for at least 900 hours during the school year.
An eligible educator must provide elementary or secondary education and meet certain criteria in order to claim these tax deductions.
Both public and private school eligible educators qualify for the tax deductions for teachers. Additionally, eligible educators must spend a minimum of 900 hours in providing secondary education to qualify for the educator expense deduction.
What are Qualified Expenses for the Educator Expense Deduction?
Educators can deduct the unreimbursed cost of qualified educator expenses. The educator expense deduction operates as an adjusted gross income (AGI) deduction, specifically benefiting teachers and education professionals. Qualified expenses include:
- Books, school supplies and other materials used in the classroom.
- Equipment, including computer equipment, software and services.
- Continuing education courses, including professional development courses, related to the curriculum they teach or the students they teach. However, teachers should consider applying fees for professional development courses to the lifetime learning credit for a better result. Teachers can also claim deductions for professional development courses related to their teaching.
The deduction only applies to unreimbursed employee expenses. Many teachers spend a significant amount of their own money on classroom supplies, often without reimbursement.
Nonathletic supplies for courses in health or physical education do not qualify.
Does Home Schooling Qualify for the Deduction?
Qualified expenses do not include the cost of home schooling.
Can I Claim COVID Expenses On My Tax Return?
Expenses for COVID-19 personal protective equipment to stop the spread of the disease in the classroom will qualify for the educator deduction. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers, and other items recommended by the Centers for Disease Control and Prevention (CDC).
Claiming the Educator Expense Deduction
To claim the educator expense deduction, eligible educators must follow these steps:
- Determine Eligibility: First, ensure you meet the criteria for an eligible educator. This includes working at least 900 hours in a qualifying school that provides elementary or secondary education to kindergarten through 12th-grade students.
- Keep Accurate Records: Maintain detailed records of your qualified expenses. This includes keeping receipts, noting dates, amounts, and descriptions of purchases. Good record-keeping is crucial for substantiating your claims.
- Calculate Qualified Expenses: Add up the total amount of your qualified expenses. This can include books, supplies, materials, and professional development courses related to the curriculum or students you teach.
- Complete Tax Forms: When filing your federal tax return, claim the educator expense deduction on Form 1040, Form 1040A, or Form 1040EZ. You may also need to complete Form 2106 for unreimbursed employee expenses.
- Itemize Deductions: If you choose to itemize deductions, you can claim the educator expense deduction as a miscellaneous itemized deduction. This can be particularly beneficial if your total itemized deductions exceed the standard deduction.
By following these steps, eligible educators can effectively claim the educator expense deduction and reduce their taxable income.
Limitations of the Deduction
While the educator expense deduction can provide significant tax savings, there are some limitations to be aware of:
- Annual Limit: For the 2024 tax year, the maximum educator expense deduction is capped at $300. This limit applies per educator, so if both spouses are eligible educators, they can each claim up to $300.
- Income Limits: The deduction is subject to income limits. Eligible educators with higher adjusted gross incomes (AGI) may find that their ability to claim the full deduction is reduced.
- Phase-Out Limits: The deduction may be phased out for eligible educators with incomes above certain thresholds. It’s important to check the specific phase-out limits for the tax year in question.
- Other Tax Credits or Deductions: The educator expense deduction may be affected by other tax credits or deductions, such as the Lifetime Learning Credit or the Tuition and Fees Deduction. It’s essential to consider how these interact to maximize your overall tax benefits.
- Reimbursed Expenses: Only unreimbursed expenses qualify for the deduction. If your school or another source reimburses you for certain expenses, you cannot claim those amounts as part of the educator expense deduction.
By understanding these limitations and carefully planning your tax strategy, eligible educators can maximize their tax savings and reduce their federal tax liability.
A Few Final Pointers about Taxes for Teachers
As with all deductions and credits, keep good records of the educator expense tax deduction, including receipts, cancelled checks and other documentation. This will be your proof in case the IRS ever comes asking about your educator expense deduction.
Physical education teachers should note that certain non-athletic supplies are not considered qualified expenses and cannot be claimed as deductions. The educator expense deduction cannot be used in this situation
Tax Season Tips for Educators
Taxpayers who requested more time to file a tax return for the 2023 tax year have until October, 15, 2024 to file their returns with the IRS. Nevertheless, it is best to file tax returns as soon as possible to avoid processing delays.
Be sure to file tax returns by the deadline. Late returns are subject to interest and penalties, which can be painful. If taxes need to be paid with the tax return, it is better to file a return without a tax payment than not file at all.
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