Because of inadequate school funding, it is not uncommon for teachers to pay for needed supplies out of their own pockets. Teachers can get a tax deduction for all or some of these 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 is extended by Congress on a year-to-year basis, so be sure it’s in effect during the current year. Under the American Taxpayer Relief Act, the deduction was reinstated for 2012 and 2013.
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 deductions. 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.
Which educators qualify?
You qualify for the educator deduction if, for the tax year, you are:
- a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide, and
- you work at least 900 hours during the school year.
What expenses qualify?
You can deduct any ordinary and necessary expenses for books, supplies, equipment (including computer equipment, software, and services), and other supplementary materials used in the classroom. For courses in health and physical education, expenses for supplies are deductible only if they are related to athletics.
You may not deduct for home schooling or for nonathletic supplies for courses in health or physical education.
Be sure to save the receipts for your purchases of books and classroom supplies. The IRS suggests that educators keep records of qualifying expenses in a folder or envelope with a label such as, “Educator Expense Deduction,” noting the date, amount, and purpose of each purchase. This will help prevent a missed deduction at tax time.
Reduction of deduction
You must reduce the amount of your deductible educator expenses by the following amounts:
- any nontaxable U.S. series EE and I savings bond interest you received that was reported to you on IRS Form 8815
- nontaxable qualified state tuition program earnings
- nontaxable earnings from Coverdell education savings accounts, and
- any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1.
Deduction as Unreimbursed Employee Expense
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. However, this deduction is not nearly as good as the educator deduction because it's a miscellaneous itemized deduction. This means that it's deductible only if, and to the extent, it and your other miscellaneous itemized deductions exceed 2% of your adjusted gross income.
Example: Lana, a school teacher, has an adjusted gross income of $50,000. She may deduct her miscellaneous itemized deductions, including educator expenses only to the extent that they exceed 2% of $50,000, or $1,000. This year she had $500 educator expenses and $1,100 in other miscellaneous itemized deductions. Her total miscellaneous itemized deductions are $1,600, but because of the 2% of AGI limit, she may only deduct $600 of this amount—the amount that exceeds $1,000.
If you take this deduction, you can’t claim the same expense as an educator deduction as well--in other words, you can't deduct the same expense twice.