The Educator Expenses Tax Deduction
Educator Expenses in 2018 and Going Forward
The educator expense deduction is an adjustment to income, one of those advantageous “above the line” deductions that used to appear on line 23 of your Form 1040. But that was before the Internal Revenue Service radically revamped the 1040 tax form in 2018.
It's still an adjustment to income and it's still a valuable tax deduction, but it appears on line 23 of the new 1040 Schedule 1. The total from Schedule 1 is then included in the calculations for line 7 of the 2018 Form 1040.
These lines might not still apply on the 2019 Form 1040, the tax return you'll file in April 2020. The IRS is reportedly again revising this standard tax form.
Claiming the Deduction
The Internal Revenue Service allows you to claim an above-the-line deduction if you’re a teacher and you’ve paid for classroom supplies or other materials out of your own pocket during the tax year—and many do.
Because it's an adjustment to income, you don't have to go through all the fuss and trouble of itemizing to claim it. It also reduces your adjusted gross income (AGI), which is important because you can become ineligible for several tax benefits if your AGI is too high.
You can still subtract the standard deduction or the total of your itemized deductions from your AGI to arrive at your taxable income. Adjustments to income are in addition to these two other tax breaks.
Qualifying for the Deduction
You must be a teacher, aide, instructor, counselor, or principal to qualify for the educator expense deduction, and you must have worked in a school certified by your state for at least 900 hours during the school year.
If you begin your teaching career in September, you most likely would not be able to claim the deduction in that year because you would not reach 900 hours by Dec. 31.
You might consider claiming the employee business expenses itemized deduction instead until you qualify, at least for the 2017 tax year. This itemized deduction was eliminated by the Tax Cuts and Jobs Act (TCJA) beginning in 2018 through at least the 2025 tax year when the TCJA potentially expires.
Only grade school and high school educators qualify. This includes kindergarten, but not preschool. The school can be a public, private, or religious institution. Costs incurred from homeschooling your children don't qualify if you're not recognized by your state as an educational institution.
What Expenses Can Be Deducted?
Most things you spend money on as an educator qualify for the deduction, provided that you bought them for use in your classroom and your school or teacher’s union has not reimbursed you for them. They must be “ordinary and necessary.” This means they're items commonly accepted and used in a classroom and your students benefited from them.
Some common deductible expenses include:
- Computer equipment, software, and services
- Supplementary materials used in the classroom
- Athletic equipment if it's used by health or physical education teachers
You can also deduct the costs of professional development courses you take—again presuming that no one reimburses you.
You can claim up to $250 of what you've spent on classroom expenses as of the 2018 and 2019 tax years. If both you and your spouse are educators, you can each claim up to $250 in expenses for a total of $500 on a joint tax return.
One spouse can't claim $300 while the other spouse claims $200 for the $500 total. Each spouse's qualifying expenses are capped at $250.
The Education Market Association estimated in 2017 that educators spend about $1,000 a year on materials and supplies for their students. So if you're a teacher, you most likely came out of pocket for more than $250.
Other Restrictions and Limitations
Although you can claim up to $250 in expenses, your deduction can be reduced by certain factors.
If you used tax-advantaged funds to pay for your own schooling or professional development courses, such as a Coverdell education savings account, you must subtract these amounts from your deduction.
If you've excluded any interest earned on Series EE or I U.S. savings bonds from your taxable income because you used the money to paid for educational expenses, your deduction is limited to the amount of your teaching expenses that exceed this amount.
Employee Business Expenses
You could deduct the difference as employee business expenses through tax year 2017 if you had classroom expenses in excess of this limit, but this required that you itemize your deductions and it's a miscellaneous deduction. You could only deduct your total work-related expenses that exceeded 2% of your AGI, and again, you could only do so through the 2017 tax year.
Although the TCJA eliminated the itemized deduction beginning in 2018, the Protecting Americans from Tax Hikes (PATH) Act of 2015 made the above-the-line educator expense deduction permanent and indexed it for inflation. This means it can be expected to increase incrementally in future tax years.
Keep Accurate Records
It’s a good idea to keep a file dedicated to these expenses. Save receipts and make notes as to what you purchased, when you made the purchases, and why.
Note: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.