Time Out: Tax Deductions for Teachers

March 12, 2018

Your classes are in full swing and you’ve never been busier. But that doesn’t mean you shouldn’t take a few moments to step away from your students and think about your taxes. If nothing else, you definitely want to make sure you get all the deductions you’re entitled to. Here are a number of deductions and other tax issues you should consider.

Deduction for Educator Expenses

As in previous years, the IRS continues to allow teachers, aides, instructors, counselors, and principals at qualified educational institutions to claim an Educator Expense Deduction of up to $250 for classroom supplies. This is important because it reduces your adjusted gross income (AGI). Since it’s an “above the line” deduction on Schedule 1 (Form 1040), you get to take it whether or not you itemize other deductions on your tax forms.

To take this deduction, you must have worked at least 900 hours during the school year. Expenses that qualify for the Educator Expense Deduction include amounts you paid out-of-pocket for:

  • Participation in professional development courses
  • Books and supplies
  • Computer equipment (including related software and services)
  • Supplementary materials you use in the classroom
  • Athletic equipment (for physical education teachers)

Make sure you retain receipts and keep clear records of your purchases.

Other Unreimbursed Expenses

In prior tax pears, if you spent more than $250 on education supplies, you could deduct that excess amount as “unreimbursed employment expenses” if you itemized your deductions. Beginning with the 2018 tax year, you can no longer claim these expenses. It’s generally thought that the standard deduction, which has nearly doubled –  from $6,350 to $12,000 for individual taxpayers, and from $12,700 to $24,000 for married couples filing jointly – would sufficiently cover the unreimbursed employment expenses, making itemizing unnecessary for most teachers.

Education Expenses

Many teachers take continuing education courses or pursue higher degrees while they teach. If you do so, you can still take advantage of the IRS’s Lifetime Learning Credit.

The Lifelong Learning Credit allows you to deduct 20% of education expenses up to $2,000. There is no limit to the number of years in which you can take advantage of this credit.

Because it’s a credit, you get to deduct every dollar up to that limit. You can’t, though, use it to get money back. In other words, you can use the credit to pay any tax you owe but you won’t receive any of the credit back as a refund.

Income from Outside Work

As a teacher, chances are you have a summer job or are doing some tutoring on the side. If you have income other than what your school pays, you’ll want to make sure that you’re having enough withholding tax taken out of your paycheck. If your outside job isn’t taking out any taxes, you might consider reducing the number of deductions you’re taking on the W-4 form you file with your school. For example, you might reduce your deductions from two to one or zero. Or, as an alternative, you can pay quarterly estimated taxes on the supplemental income you make.

If you use a portion of your home as a business, as when you tutor students in a dedicated space, you may be able to deduct qualifying office expenses. IRS rules for deducting expenses for a home office are stringent, though. You may want to consult a tax professional to determine just what you can and can’t deduct.

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