TAX TIP No. 35
A tax-deduction apple for teachers
The IRS also applies its "ordinary
and necessary" rule here. To be considered ordinary,
an item purchased for your classroom must be something
that is common and accepted in the education profession.
A necessary expense is one that is helpful and appropriate,
but it doesn't have to be required to be considered
So buying a videotaped production of "Death
of a Salesman" to help drive home Arthur Miller's
points to your students would likely meet tax muster.
But purchasing a new HD television upon which to watch
it instead of using your school's working-but-old set may raise some IRS eyebrows.
Circumstances could limit expenses
In addition to the eligibility requirements, the IRS
also has set some limits on the money spent on school
supplies. Most notable is the restriction that could
affect teachers who are continuing their own educations.
The IRS says when an educator uses any
tax-favored funds to pay for his or her own schooling,
those amounts must be subtracted from the total the
teacher claims under the educator expenses deduction.
Take for example Joe Jones, a high school
English teacher who is working toward his master's degree
in literature during school breaks. He cashed in savings
bonds to pay his tuition and excluded the bonds' $150
interest from tax. He also spent $200 for books on Shakespeare
to distribute to his 11th-grade students. He must subtract
the $150 in tax-free interest from the $200 for the
books, leaving him only $50 to claim under the educator
The same rule applies to nontaxable earnings
a teacher gets from qualified state tuition programs
or tax-free withdrawals from a Coverdell education savings
Coordinating classroom claims
The educator expenses deduction
is definitely great for taxpayers who don't itemize. But claiming
it won't prevent you from taking other eligible itemized deductions
on Schedule A.
If you're a teacher who usually itemizes
to save on taxes, such as deducting home mortgage
interest and property taxes, keep doing that. In fact,
if you spent more than $250 on your class, take another
look at the miscellaneous deductions line on Schedule
A to see if you can use the excess to also claim this
itemized tax break.
Just remember to take the educator expenses
deduction on your 1040 form, too. For example, if you spend $500 on classroom supplies, claim half of it directly on your 1040 as an educator expenses deduction. Then add the other half to your potential miscellaneous itemized deduction amount.
It might be just enough to allow you to take that tax break, too.