Tax Deductions for Teachers and Educators
Tax deductions for teachers can cover expenses, retirement plans, and more.
If you're a schoolteacher, you probably pay money out of your own pocket for at least some work-related expenses. If not reimbursed by your school-employer, most of these are deductible subject to various limits. There is also a special tax deduction for educator expenses.
$250 Educator Deduction
First, a special educator deduction allows kindergarten through grade 12 teachers to deduct up to $250 of what they pay for books, supplies, equipment, and other materials used in the classroom. This deduction began in 2005 on a year-by-year basis. It now is permanent and will be indexed to inflation after 2016.
This is a particularly valuable deduction because it is an "above the line deduction"--that is, it is an adjustment to your gross income not an itemized deduction. This means you don't have to itemize your deductions to take it.
If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses. If you have more than $250 in educator expenses or you don't qualify for the educator deduction, you may still be able to deduct part of your unreimbursed expenses for school supplies as an unreimbursed employee expense.
Unreimbursed Teaching-Related Expenses
All employees, including school teachers, are entitled to deduct unreimbursed work expenses as a miscellaneous itemized deduction. However, such expenses are deductible only if, and to the extent, they exceed 2% of adjusted gross income. Moreover, they are deductible only if you itemize your deductions instead of taking the standard deduction.
Example: Lana, a school teacher, has an adjusted gross income of $50,000. She may deduct her miscellaneous itemized deductions, including work-related expenses only to the extent that they and all her other miscellaneous itemized deductions (if any) exceed 2% of $50,000, or $1,000.
These expenses may include the cost of:
- school supplies
- work-related travel--for example, for teacher training or conferences (you can't deduct travel itself as a form of education)
- dues to belong to teacher organizations
- work-related journals and books, and
- research expenses.
Teachers often take continuing education courses or other courses to improve their skills even though they are not required. The cost of such courses may be recouped through a tax credit or be tax deductible.
Lifetime Learning Credit
Teachers can deduct the cost of training or continuing education under the Lifetime Learning Credit. The credit is 20% of the cost of the education, up to $ 2,000 per year. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability. Covered expenses include tuition, course registration, lab fees, materials and supplies, textbooks, and tuition.
Tuition and Fees Deduction
You may also be able to claim a deduction of up to $4,000 for tuition and fees you pay to attend virtually any accredited post-secondary educational institution. However, your income must be below certain limits to qualify. Also, you cannot claim this deduction if you already claim an American opportunity or lifetime learning credit for the same expenses. This deduction is not an itemized deduction, and thus not subject to the 2% of AGI limit.
Work-related education expenses can also be deducted as a miscellaneous itemized deduction. As such, they are subject to the 2% of AGI limit. To be deductible, your expenses must be for education that (1) maintains or improves your job skills, or (2) is required by your employer or by law to keep your salary, status, or job. Expenses that can be deducted include tuition, books, supplies, lab fees, and certain transportation and travel costs.
Teachers who invest their own money in a tax qualified retirement plan may deduct the amount of their contributions.
These plans include the 403b plan, 457 plan, and IRAs.
Charitable donations are a deductible itemized deduction. This includes donations to a school or other education institution. Such donations can include buying library books, materials for the classroom, or giving a monetary donation to the school.