If you are a teacher or educator, and you have out-of-pocket expenses for materials and supplies used in the classroom, you may be entitled to take advantage of a special tax benefit. There is a special deduction that eligible educators can take on their U.S. federal income tax returns for qualified educator expenses. This deduction is an adjustment to gross income, so it directly reduces your income subject to tax.
Who Is An Eligible Educator?
To be eligible for this deduction, you must be a teacher, from kindergarten through grade 12, an instructor, counselor, principal, or aide in a school, and you must have worked at least 900 hours during the school year. So temporary or part-time teachers could also take advantage of this deduction.
What Expenses Are Eligible for the Deduction?
Expenses must be what the IRS deems as qualified expenses in order to be deductible. Qualified expenses include ordinary and necessary expenses for books, supplies, and other materials used in the classroom. These expenses can also include equipment, including computer equipment, software, and services. Ordinary expenses are those that are common and accepted in your field of education. A necessary expense is considered to be an expense that is helpful and appropriate for your profession. Necessary in this case does not mean required.
How Much Can I Deduct?
If you qualify as an educator, and you have qualified expenses as indicated above, you can deduct up to $250 of your expenses as an adjustment to income on Form 1040 or 1040A. This deduction reduces your adjusted gross income subject to tax. If you are married filing jointly and both you and your spouse are educators, you can deduct up to $500, however, neither spouse can deduct more than $250 of his or her own expenses.
Are There Any Restrictions?
Home schooling expenses are specifically excluded from qualified expenses for tax purposes. Also, expenses for non-athletic supplies used in health or physical education courses are not deductible.
Certain amounts that you earn or receive must be subtracted from the qualified expenses you can deduct. Any of the following amounts will reduce your qualified expenses:
Excludable U.S. series EE and I savings bond interest
Nontaxable earnings from a qualified state tuition program
Nontaxable earnings from Coverdell education savings accounts
Any reimbursements you receive for your education expenses that were not reported in box 1 of your Form W-2 as taxable compensation.
What If I Have More Expenses than the Maximum Deduction?
If you have qualified expenses for more than the maximum amount allowable as an adjustment to income on Form 1040, and you itemize deductions rather than taking the standard deduction, you can deduct the excess as an itemized deduction on Schedule A. The amount you can deduct as an itemized deduction would be combined with any other job expenses or other miscellaneous itemized deductions you have, and would be subject to the 2% of adjusted gross income limit that applies on these types of itemized deductions.