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TAX TIP No. 35
A tax-deduction apple for teachers


Teaching takes a toll on many educators' pocketbooks as they routinely buy supplies for their financially strapped schools. Over the past few years, they've enjoyed a tax break for such academic dedication.

In this tax tip:
 
 

Teachers and other educators can deduct up to $250 that they spent last year to buy classroom supplies.

Even better, the deduction is claimed directly on Form 1040, meaning there's no need to itemize to get the break. Rather, it's an adjustment to your income, helping cut your tax bill by reducing your overall income. The less income to tax, the lower the tax bill.

While every little bit helps, the educator expenses deduction is indeed relatively small. But because it's an adjustment to income and doesn't require itemizing expenses, more school employees should now be able to claim at least a portion of their class-related expenditures.

Before this above-the-line deduction was created, these costs could be claimed only if they were included as miscellaneous itemized deductions on Schedule A. Even then, the expenses were useless unless they and all other allowable costs totaled at least 2 percent of the filer's adjusted gross income.

Who can claim costs?
The deduction is not limited to teachers. The Internal Revenue Service says you can take the deduction if, for the tax year, you were employed at a state-approved public or private school system and held one of a number of positions.

Who can take deduction
Teachers
Instructors
Counselors
Principals
Aides

Your position can be with any class from kindergarten through grade 12 as long as you work at least 900 hours during the school year.

Couples who share education careers could get a double break if they file jointly. However, each spouse is limited to $250 of qualified expenses. That means if you spent $350 on school supplies and your husband spend $150 on his classroom, you can only deduct $400 on your return even though your combined education expenses were $500.

What about home schooling? Sorry, but the tax law specifically states that costs for this type of instruction don't count toward the educator expenses deduction.

What items are deductible?
As for exactly what you can deduct, the guidelines are pretty broad. You can count unreimbursed costs for books, supplies, computer equipment (including software and services) and other equipment and supplementary materials used in the classroom.

-- Updated: Feb. 24, 2009
 
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