Maybe if the IRS lexicon was a little bit more “vernacular,” with less loopholes and less lines, we might be able to tolerate the looming mid-April Tax Day that preoccupies our minds until we pen our signature on our last form in a series of daunting forms. But as it stands, most of us brace ourselves for a tax filing process during which even professional CPAs have questions. You’re not alone, and educators, you’re in luck. We know that more goes into the classroom than what meets the budget, but as caring as you are for thinking of your students’ needs, you deserve a (tax) break. Below is a cheat sheet of how to take advantage of what the IRS has to offer on your tax return:
Don’t let those paid-out-of-pocket supplies go unaccounted for.
Here’s the deal. If you work at least 900 hours in an elementary or secondary school for grades Kindergarten through Grade 12 and hold a teacher, instructor, counselor, principal, or aid position, you are eligible to deduct up to $250 of any unreimbursed expenses if filing individually. These expenses include “books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom” (irs.gov). For those teaching health or phys ed classes, the only supplies that qualify for this deduction are those related to athletics.
If you are married and filing jointly and both you and your spouse are educators, then the deductible limit is $500, but no more than $250 each. So if you incurred $300 in expenses and your spouse only incurred $150, then you can only deduct $400.
Remember, these expenses must have been incurred during the tax year, not the school calendar year.
Why is this a win for teachers?
In short? These expenses are not itemized, or they’re considered “above-the-line deductions” and so are not limited due to higher income. This means there’s less adjustable gross income to tax and therefore you have to give away less money : )
What about my other expenses that exceed $250?
Don’t fret. Your expenses likely tip the $250 scale, but the overflow can be claimed as unreimbursed employee expenses under “Miscellaneous Items.” Because these are line items, they must adhere to the 2% rule; in other words, you can only deduct an expense amount that exceeds more than 2% of your AGI. So if your AGI is $50,000 and your additional expenses are $2,000, you can only deduct $1,000 of that amount.
How Can I Account for Qualified Expenses At Eligible Educational Institutions?
Most of us are forever students of our professions, and with the growing opportunities for qualified continuing ed courses both online and in-class, we’re saying good-bye to the one-and-done education paths. Lucky for us learners though, like the out-of-pocket supplies addressed earlier, these tuition expenses are above-line-line deductions. That’s right. No 2% rule here, but you bet your AGI is reduced. There is, like all things, a limit, however. You may only deduct up to $4,000 in class fees, and if you’re in a higher income bracket (more than $65,000 if single and $130,000 married filing jointly), the cap is lower. The deduction is eliminated if your income exceeds $80,000 ($160,000 married filing jointly).
The good news is that Congress has finally made the paid-out-of-pocket tax break a permanent policy, so you don’t have to hold your breath come every tax season. The continuing ed deduction is also in effect through at least the 2016 tax year, and is another reason to feel some solace through this whole process.
How Can Voki Help with Your Tax Break (and Classroom, Of Course)?
Okay, cue shameless plug-in. Voki is a great educational tool that introduces tech into the classroom, engages students, and gives students a hands-on approach to their own learning experience. And, guess what? It falls under that $250 above-the-line unreimbursed expenses. We’re just saying…
Good luck filing, and treat yourself once it’s through.