Deducting out-of-pocket classroom-related expenses of school teachers

What are the tax rules that teachers can use to deduct out of pocket classroom related expenses?

School teachers will often pay for school supplies with their own money. This can get expensive as many schools are cutting back on the supply budgets of school teachers. Congress realizes that teachers doing this is common and provides a special tax break for teachers. The important news is that if you qualify as an “eligible educator,”  a school teacher will be allowed a “classroom expense deduction” of up to $250 for expenses paid during the school year.

 

Deducting out-of-pocket classroom-related expenses of school teachers

Generally, the deduction is possible with expenses paid for books, certain supplies, computer equipment, software, other equipment, and supplementary materials you use in the classroom

A nice thing about this deduction is that the classroom expense deduction is allowed whether or not you itemize deductions. Most of the time, unreimbursed expenses are among the “miscellaneous itemized deductions” that are deductible only to the extent your total “miscellaneous itemized deductions” exceed 2% of your adjusted gross income (AGI). This would prohibit the deduction of most expenses, because the limit could be very high.

 

Who is an eligible educator for tax deduction?

An “eligible educator” is an individual who is a kindergarten through 12th grade teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year, and a school is any school which provides elementary education or secondary education (kindergarten through 12th grade), as determined under state law.

To be deductible-under both the classroom expense deduction rule and the unreimbursed employee business expense rule-expenses must be “ordinary and necessary expenses” that you pay in connection with doing your job as a teacher. This means that the expenses must be customary and usual for teachers in your type of school located in your area, and must be appropriate or helpful (but not necessarily essential) to doing your job properly. The ordinary and necessary test will depend on the area in which a teacher is teaching.

 

What kind of expenses can teachers deduct on taxes?

The biggest qualification for this is that the expense must not be reimbursable by an employer. The item must also be for something that occurs in the classroom. A teacher would not be able to pay for expenses related to an out of classroom field trip.

 

Deducting Expenses as Teacher

In order to claim a deduction for classroom expenses-either under the classroom expense deduction rule or the unreimbursed employee business expense rule-you must be able to prove that you paid the expenses, when you paid them, and what the expenses were for. It is absolutely necessary for receipts for the items purchased showing the date and amount of the purchase, and identifying the specific items purchased, will usually do the trick.. Photographs of the items in the classroom would be helpful in this regard and can substantiate the classroom deduction expenses upon an IRS audit.  The deduction is not available for expenses paid after Dec. 31, 2013.

 

$250 classroom expense deduction 

In addition to these requirements, the up-to-$250 classroom expense deduction is subject to one further limitation: the deduction is allowed for expenses only to the extent the amount of those expenses exceeds the sum of the following amounts that are excluded from gross income for the tax year:

  • redemption proceeds from U.S. savings bonds redeemed to pay for qualified higher education expenses;
  •  certain amounts distributed from so-called “qualified tuition programs” (also called “529 plans”) for the financing of qualified higher education expenses; and
  • certain amounts distributed from Coverdell education savings accounts for qualified education expenses.