In the Tax Relief and Health Care Act of 2006, Congress recognized that teachers deserve a tax break that doesn't require them to jump through hoops when filing their returns. This special opportunity for teachers to receive a tax break for some of their classroom expenses is officially called the educator expense deduction. It allows eligible educators to get up to a $250 deduction for expenses that are not reimbursed by the school or school district.
The deduction is limited to teachers, teacher's aides, counselors, principals and other instructors in kindergarten through twelfth grade only. You must work at least 900 hours per school year to be considered eligible, so substitute teachers, summer-school or part-time instructors may not qualify. The deduction is not extended to parents who home-school their children.
You can deduct the cost of books, equipment, computers, software, supplies or other items purchased for use in classroom instruction and which are considered necessary and ordinary in your field of instruction. Home-schooling course material is excluded. If you were reimbursed for part of your expenditures, you can only claim the deduction for unreimbursed costs.
Deduction vs. Credit
The educator deduction is not a tax credit, which means that it reduces your taxable income, rather than being subtracted from your tax liability. The maximum deduction of $250 will net you a tax break of $37.50 if you're in the 15 percent tax bracket and $62.50 for taxpayers in the 25 percent bracket. This differs from a credit, which is a dollar-for-dollar reduction of taxes owed.
Taking the Deduction
The deduction is shown as an adjustment to income, which means you don't need to itemize deductions to take the benefit. Report up to $250 on line 23 of Form 1040 and line 16 of Form 1040A. You cannot take this deduction on Form 1040EZ. If you and your spouse are both qualified educators with eligible expenses, you can deduct up to $500 on your return for married filing jointly.
If you have over $250 of classroom expenses, or you do not qualify for the educator deduction for any reason, you may still qualify for a tax break. You can claim all other educator expenses as unreimbursed employee expenses on Schedule A if you itemize. You'll need to exceed 2 percent of your adjusted gross income to take the deduction. Report those expenses on line 21 of Schedule A as miscellaneous deductions.
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