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Tax Benefits for Educators

As teachers, administrators, and aides have kicked off the new school year, taxes may not be heavy on their minds just yet. However, knowing what to track throughout the school year can help reduce the burden at tax time. There are three key work-related tax benefits that may help educators reduce what they pay in taxes.

Educators can utilize tax deductions for qualified expenses related to their profession. Many out-of-pocket expenses educators may incur include classroom supplies, training, and travel.

There are two methods educators can choose for deducting qualified expenses: claiming the Educator Expense Deduction (up to $250) or, for those who itemize their deductions, claiming eligible work-related expenses as a miscellaneous deduction on Schedule A.

A third key benefit enables many teachers and other educators to take advantage of a variety of education tax benefits for their ongoing educational pursuits, especially the Lifetime Learning Credit or, in some instances depending on their circumstances, the American Opportunity Tax Credit.

Educator Expense Deduction

Educators can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but no more than $250 each) of unreimbursed business expenses. The educator expense deduction, claimed on either Form 1040 Line 23 or Form 1040A Line 16, is available even when an educator doesn’t itemize their deductions. To do so, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide for at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Those who qualify can deduct costs like books, supplies, computer equipment and software, classroom equipment, and supplementary materials that are used in the classroom. Expenses for participation in professional development courses can also be deducted. Athletic supplies qualify if used for courses in health or physical education.

Itemizing Deductions (Using Schedule A)

If the qualifying expense exceeds the $250 limit for the Educator Expense Deduction, they can claim these excess expenses as a miscellaneous deduction on Schedule A (Form 1040 or Form 1040NR). In addition, educators can claim other work-related expenses, such as the cost of subscriptions to professional journals, professional licenses, and union dues. Transportation expenses may also be deductible in certain situations. For example, this applies when an educator assigned to teach at two different schools needs to drive from one school to the other on the same day.

Miscellaneous deductions of this kind are subject to a limitation.

Keeping Records

Educators should keep detailed records of qualifying expenses noting the date, amount, and purpose of each purchase. Scanning in receipts to keep electronic copies is another way of ensuring you stay organized. This will help prevent a missed deduction at tax time.

Taxpayers should also keep a copy of their tax return for at least three years. Copies of tax returns may be needed for many reasons. If applying for college financial aid, a tax transcript may be all that is needed. A tax transcript summarizes return information and includes adjusted gross income.

For any questions on the educator tax benefits, always consult a Certified Public Accountant. Submitted by: Michael Kalifeh, Tax Services, Thomas Howell Ferguson, P.A. CPAs, (850) 668-8100, mkalifeh@thf-cpa.com.

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