Tax News For Teachers: The Educator Expense Deduction Is Now Permanent

In recent years, some enacted tax breaks have been extended on a year-to-year basis. The tentative nature of the tax rules often led to uncertainty in planning. The tax deduction for educator expenses has now been made permanent and can be expected to be available on Form 1040 each year.

The educator expense deduction is taken by individuals in the teaching profession who incur out-of-pocket classroom expenses. Because of the tentative status of the deduction over several years, there is still some incorrect online information concerning its expiration. The deduction is not huge, but it is simple to claim and reduces taxable income dollar for dollar.

Annual limitations

A qualified educator can deduct up to $250 of their out-of-pocket classroom expenses. Qualified expenses include those paid for supplies such as paper, pencils, or books. In addition to teachers, the deduction can be taken by an employee classified as a teacher's aide. A principal or a counselor may also take the deduction.

The main requirement for claiming the educator expense deduction is that you must have worked with students for at least 900 hours during the year. The deduction applies to kindergarten through high school, at both public and private schools. Homeschool expenses are not deductible, although legislation has been introduced to address the disparity.

If you are married to an educator, your spouse may also claim the deduction. Married educators may deduct a combined total of up to $500. Your un-reimbursed expenses might actually exceed the limitation amount of the educator expense deduction. If so, the excess amount can potentially produce a separate tax deduction.

Itemizing excess expenses

Many tax filers itemize their personal deductions instead of claiming a standard deduction amount. If you itemize deductions, your out-of-pocket classroom expenses in excess of $250 can be reported as an unreimbursed work expense. Because itemized job expenses are deductible only to the extent they exceed a threshold amount, they are less beneficial than the separate educator expense adjustment.

A straightforward method to keep a record for tax purposes is to obtain separate receipts for your out-of-pocket classroom purchases. Collect the receipts together during the year, and then calculate a total amount for use in tax preparation. Now that the deduction has been made permanent, you know that the receipts will in fact be useful.

The amount of the educator expense deduction may increase in future years as it is indexed to account for inflation. For more information, contact Rainbow Tax Service Inc or a similar company.