Teachers are often underpaid and underappreciated. There is one group that understands what teachers go through and wants to give them a little break — the IRS. The IRS offers many deductions and credits to lighten the tax burden of teachers. All teachers should make sure that they take advantage of all these tax deductions.
The IRS allows teachers to take a deduction for money they spend on their classroom. These expenses include books, craft supplies like paper and crayons, DVDs relevant to the curriculum, computers, printers, printer ink, and supplementary materials for the students. A teacher can take a total of $250 in deductions for these classroom expenses. If two people who are married filing jointly are both teachers, they are each allowed to take a $250 deduction for a total of $500. This amount is a separate line item on the Form 1040; it is not an itemized deduction. This means that even if a teacher is taking the standard deduction, the educator expense deduction can be taken.
Union Dues and Other Unreimbursed Expenses
Many teachers belong to a teacher's union and pay dues out of each paycheck. These dues are a tax deduction. This deduction can only be taken if the teacher itemizes deductions on Schedule A. In addition, the total deductions on the section of Schedule A titled "Job Expenses and Certain Miscellaneous Deductions" must exceed 2 percent of the total adjusted gross income. Teachers can include other employment-related expenses such as job-related travel. This would include expenses incurred while attending a teachers' convention, for example. Also, if the school has a required uniform, it is possible that the cost of that uniform are tax-deductible. If the uniform is not appropriate for use outside of school, the cost can be included in the "Job Expenses" section of Schedule A.
Many teachers are required to take courses continually to stay up to date in their field. These courses are not always reimbursed by the school. If a teacher pays for the continuing education out of pocket, the cost is tax-deductible. This deduction is called the Lifetime Learning Credit and is taken on the Form 8863. The credit is for 20 percent of the cost of the courses taken and is limited to $2,000 per year. This is a tax credit which means it reduces the tax bill dollar-for-dollar instead of lowering taxable income. This makes it a very desirable tax break to take.
Tutoring and Self-Employment
If a teacher tutors students after hours or during the summer and is paid directly by the student rather than by the school, the teacher is considered self-employed. The teacher can deduct the cost of traveling to meet with students, expenses such as office supplies to keep track of tutoring schedules, fees, and student progress and any equipment or supplies purchased to help the students being tutored. These deductions are made on Schedule C, which is the self-employment schedule. In addition, the teacher will be able to take one-half of the self-employment tax as a deduction on Form 1040.
Teachers who make donations to the school can take a tax write-off on Schedule A under "Charitable Donations." Donations could include purchasing a new set of encyclopedias for the library or a new computer for the classroom, or giving a gift of money to the school to help with a project that the school would like to complete. These donations must come out of the teacher's own pocket and must be given to the school. Purchasing a computer for classroom use but taking it home for the summer and using it as a personal computer is an educator expense, not a charitable donation.