The Educator Expenses Tax Deduction
Educator expenses are tax deductible
If you’re a teacher and you’ve paid for classroom supplies or other materials out of your own pocket—and many do—the Internal Revenue Service allows you to claim these expenses as a tax deduction. It’s an adjustment to income, so it’s an “above the line” deduction on line 23 of your Form 1040.
This is particularly advantageous because you don't have to go to all the fuss and trouble of itemizing to claim it. It also reduces your adjusted gross income, which can be important because you can become ineligible for several tax benefits if your AGI is too high. You can then take the standard deduction or the total of your itemized deductions off this amount, as well as any tax credits for which you might be eligible.
As of the 2017 tax year, you can claim up to $250 of what you've spent on classroom expenses for supplies such as materials, books and software. 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.
The Education Market Association estimates that educators spend about $1,000 a year on materials and supplies for their students, so in all likelihood, you came out of pocket for more than $250. If you have classroom expenses in excess of this limit, you can deduct the difference as employee business expenses. But this requires that you itemize your deductions and it's a miscellaneous itemized deduction, which means it's subject to a threshold of 2 percent of your adjusted gross income. You can only deduct total work-related expenses that exceed this amount.
These itemized deductions are also added back to your income for purposes of calculating the alternative minimum tax if you're subject to it.
The Protecting Americans from Tax Hikes (PATH) Act of 2015 made this deduction permanent and indexed it for inflation, which means it can be expected to increase incrementally in future tax years.
Qualifications for the Deduction
You must be a teacher, aide, instructor, counselor or principal to qualify for the 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 at the beginning of a school year, you most likely would not be able to claim the deduction in that year because you would not reach 900 hours. You'd become eligible the following year, however. You might consider claiming the employee business expenses itemized deduction for the current year instead if your expenditures during those first four months are significant enough.
Only grade school and high school educators qualify, but the school can be a public, private or religious school. Costs incurred from homeschooling your children don't qualify because 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 you bought them for use in your classroom and your school, teacher’s union or no one else has not reimbursed you for them. They must be “ordinary and necessary.” This means they're items commonly accepted and used in a classroom.
It’s a good idea to keep a file dedicated to these expenses so you can save receipts and make notes as to what you purchased and why. Some common deductible expenses include:
- Computer equipment, software and services
- Supplementary materials used in the classroom
- Athletic equipment if used by health or physical education teachers
- Professional development courses beginning in 2016
Restrictions and Limitations
Although you can claim up to $250 in expenses, your deduction may be reduced by certain factors. If you use tax-advantaged funds to pay for your schooling, you must subtract these amounts from your deduction. If you exclude from your taxable income any interest earned on Series EE or I U.S. savings bonds because you paid for educational expenses, your deduction is limited to the amount of your teaching expenses that exceed this amount.
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.