Educator Expense Deduction
Most of us know at least one teacher or educator who has devoted his life to advancing the education of students. Along with the gratification of seeing students succeed and the long summer vacations, the IRS offers another benefit: an above the line deduction for educator expenses.
The IRS defines an educator as an individual who is a kindergarten through 12th grade teacher, instructor, counselor, principal or aide, working at least 900 hours a school year in an elementary or secondary education school.
Instead of claiming these educator expenses as an itemized deduction on Schedule A, the Tax Relief Act of 2010 extended the above the line deduction for educator expenses. This allows educators to deduct up to $250 ($500 if married filling joint and both spouses are teachers) in the calculation of adjusted gross income.
Educators can deduct unreimbursed expenses incurred for supplies, books, computer equipment, software, and supplementary materials used in the classroom. The IRS states qualified expenses include ordinary and necessary expenses that are common and accepted in their educational field and that are helpful and appropriate for their profession. Expenses do not have to be required by an educator’s school to be deductible.
Gifts to students, along with home schooling expenses and non-athletic supplies for physical education and health courses are not qualified expenses. The IRS has previously denied expenses for an after-school club if the supplies were not ordinary and necessary for the educator’s main job as a teacher.
The IRS recommends educators save receipts for qualified expenses and keep detailed records noting the date, amount, and purpose of each expense. If an educator has more than $250 of expenses, the remaining educator expenses can be deducted on Schedule A as an itemized deduction subject to the 2% limitation.
These educator expenses are deductible only to the extent that they exceed any of the following amounts for the tax year: interest on qualified US Savings Bonds excluded from income because they were used to pay higher education expenses, distributions from qualified tuition program excluded from income, and tax-free withdrawals from Coverdell Education Savings Accounts.
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