The Educator Expenses Tax Deduction
Educator expenses are tax deductible
The educator expense deduction is an adjustment to income. It’s an “above the line” deduction on line 23 of your Form 1040. 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.
Because it's an adjustment to income, you don't have to go to 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 take the standard deduction or the total of your itemized deductions off the amount of your AGI to arrive at your taxable income.
Qualifying for the Deduction
You must be a teacher, aide, instructor, counselor, or principal to qualify for the educator expense deduction. 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'd become eligible the following year, however, and you might consider claiming the employee business expenses itemized deduction instead until you qualify, at least for the 2017 tax year. This itemized deduction is eliminated by the Tax Cuts and Jobs Act (TCJA) beginning in 2018.
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 benefit 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
- Professional development courses beginning in 2016
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 tax year. 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 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.
If you have classroom expenses in excess of this limit, you can deduct the difference as employee business expenses through tax year 2017. But this requires that you itemize your deductions and it's a miscellaneous deduction. You can only deduct your total work-related expenses that exceed 2 percent of your AGI, and again, you can only do so through the 2017 tax year.
Although the TCJA eliminates 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.
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.
How to Claim the Deduction
You can claim the educator expense deduction on line 23 of the 2017 Form 1040. Use line 16 if you file Form 1040A. You can't claim this deduction on Form 1040EZ.
The IRS is issuing a new Form 1040 for 2018 which is intended to replace the old 1040 and Forms 1040A and 1040EZ as well. In all likelihood, these line numbers won't correspond with the new form so look it over carefully when it becomes available. Reviewing an updated IRS Publication 529 for the 2018 tax year can be helpful as well.
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 purchase, 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.