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The Educator Expense Tax Deduction

by | Jun 1, 2024 | 2024, Accounting, Tax Credits and Deductions, Tax planning, Taxes | 0 comments

The main tax relief for teachers is the Educator Expense Deduction.  To qualify for the Educator Expense Deduction in any given year, you must fulfill three criteria:

  1. You worked as an educator, instructor, advisor, principal, or aid for children from kindergarten to 12th grade.
  2. You worked for at least 900 hours in a state-certified elementary or secondary school. This includes public, private, and religious schools.
  3. You spent money on qualified educators’ expenditures.

The first criterion prohibits college or other post-secondary teachers from claiming the deduction, and the second implies that homeschooling parents are not eligible.

Qualifying educator expenses

Examples of items eligible for the Educator Expense Deduction include:

  • Books
  • School supplies
  • Computer equipment (webcams, headset) and software
  • Athletic equipment for physical education teachers
  • Other purchased items that are appropriate for and helpful to the students and classroom

You can only deduct classroom expenditures if you have not been reimbursed for them. You cannot deduct money for teaching supplies that was returned to you by a school, teachers union, parent-teacher association, or anybody else.

COVID-19 related expenses

The Educator Expense Deduction allows deductions for personal protective equipment (PPE), sanitizer, plexiglass, and disinfectants intended to prevent the spread of COVID-19.

Claiming tax deductions

Teachers can utilize the Educator Expense Deduction regardless of whether they take the Standard Deduction or itemize their tax deductions.

For the 2023 tax year:

  • A teacher can deduct a maximum of $300
  • Two married teachers filing a joint return can take a deduction of up to $300 apiece, for a maximum of $600

Reducing your Educator Expense Deduction

In certain cases, you may need to lower your Educator Expense Deduction.  Your deduction can be lowered by:

  • Interest on US savings bonds that you were allowed to receive tax-free since you utilized the funds to pay for higher education expenditures
  • Distributions from 529 programs that you were not required to record as taxable income
  • Tax-free withdrawals from Coverdell Education Savings Accounts

Job-related teacher expenses for certain states

Can instructors write off a home office for virtual teaching during the COVID-19 pandemic?  At the federal level, instructors are unable to deduct unreimbursed employee expenditures such as a home office. However, if you reside in one of the seven states that choose to maintain their own version of this tax break, you are fortunate. The following states allow for deductions on their individual state income tax returns:

  • Alabama
  • Arkansas
  • California
  • Hawaii
  • Minnesota
  • New York
  • Pennsylvania

If you exceed the Standard Deduction limit, you can only claim the deduction for state taxes as a miscellaneous itemized deduction.

Remember that to deduct home office expenditures, you must have a separate workspace that you use only for your employment. For example, working at your kitchen table will not qualify.

Keep in mind that depending on the home office deduction type you pick, you may be able to deduct utilities such as internet expenses. Keep note of each of these objects.

Keeping track of expenses

Keeping detailed records of all your classroom costs is essential for claiming your tax-deductible educator expenses.

  • Keep your receipts in a separate file.
  • Consider keeping track of all qualified purchases in an appointment book or planner.
  • Try using certain colors or codes to make them easier to discover.

Schedule C: Private tutors and pandemic pod teachers

Are you a teacher who also does tutoring on the side? Private tutors who work with students in person or virtually through distance learning are often considered self-employed and can deduct costs related to their education company on Schedule C. If you tutor, find out whether you are considered self-employed, the tax consequences, and potential deductions.

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