What Tax Write-Offs Are Available to Teachers?

As back to school season commences and the summer comes to an end, teachers have to start preparing for this new school year. This often includes buying materials for their classroom with their own money. Many schools, especially public schools, do not have the budget to provide a teacher with everything they need to make a classroom comfortable, and sometimes even functional. Not to mention, some students can’t afford their own school supplies and have to borrow them from their teachers. So, many teachers choose to spend their own money on classroom supplies. However, some of the supplies can be taken as a write off on the teacher’s tax return.

Tax Write-Offs For Teachers

There is a tax write-off called the “Educator Expense Deduction” that is specifically for teachers. This write-off is to help teachers that had to pay for things in their classroom that their school did not provide them. When it comes to contractors and freelancers, they are able to write off purchases that they make if they use it for work. Although teachers can only write off a portion of their expenses, the concept is the same. The IRS permits teachers to deduct expenses, which will reduce their taxes come April- however, limits apply.

What Does the IRS Consider an Expense For Tax Write-Offs?

Because teachers buy so many things to make their classrooms feel more like home, the IRS has outlined what and how much can be written off by teachers. According to the IRS,¹ teachers and other educators can deduct up to $250 of business expenses each tax year. The expenses that teachers can write off on their taxes are limited to classroom materials. These classroom materials include:

• Books
• Pens and pencils
• Computers
• Computer software or services
• Computer equipment like speakers or headphones
• Notebooks and printing paper
• Anything else that is essential and helpful for teaching their course

With the COVID-19 pandemic, additional materials are necessary to maintain safety in the classroom. So, the IRS extended their qualifications of classroom supplies to include protective gear, disinfectant methods, and clear separators. If an item is used to protect students during the pandemic, it is qualified to be a deduction of the Educator Expense Deduction.

Also, if your spouse is an educator as well, consider filing jointly. This can make you two eligible to deduct up to a maximum of $500 per tax year. So, if you two can share things like a pack of printer paper or a pack of pencils, this could be beneficial.

Who is Considered an Educator?

There are certain qualifications, according to TurboTax,² that are required to utilize the Educator Expense Deduction each tax year. In other words, only certain positions are considered educators to the IRS. First, you must have been employed as a teacher, school counselor, teacher’s assistant or aide, or a principal. Second, you must have been in one of those positions for the grades kindergarten through the 12th grade. Lastly, you also must have worked at least 900 hours at a state-certified school (this could be private, religious, or public schools). It’s important to note that higher education professors or tutors of any grade do not qualify for the Educator Expense Deduction. Additionally, in order for an item to qualify for this deduction, it cannot have been reimbursed by the school, booster club, parent, or any other outside source.

Other Tax Credits For Teachers

The Educator Expense Deduction is not the only credit that teachers can receive. If you are a teacher who is obtaining a Master’s Degree or are enrolled in classes to improve your job skills, you may be eligible for the Lifetime Learning Credit. This credit can reach a value of up to $2,000 per year in some cases. To see how much you would qualify for, talk to your CPA.

Some other deductions may apply for teachers who are exclusively contractors for an educational organization and work from home. Because contractors are technically self-employed in most cases, they can write off their home office expenses. These include your home office furniture, power bill, Wi-Fi bill, phone bill, property insurance, and a portion of your rent. Again, this is only if you are a contractor hired by an educational organization. These contractors are not qualified for the $250 Educator Expense Deduction, but they may be able to take advantage of far more tax write-offs than standard teachers.

How to Keep Your Deductions Organized

For every type of educator, the school year is a constant influx of busy activities and paperwork. So, how do you keep up with your deductions for tax season? At Dayton and Sydney, we always recommend saving your receipts in a filing cabinet and color-coding them so that they are easily accessible. This could be at school or at home– wherever you feel they are safest. As long as you can remember to bring your receipts to your home or your CPA when you are ready to do your taxes.

Another way to keep track of your receipts is by making a spreadsheet through a number of online platforms. Do your research to find the one that’s right for you. With these tools, you can keep track of what you purchased, how much it was, and add up all of the expenses during tax season. You can even upload images of each receipt or paste the link to an order confirmation if your purchase was made online. Then, you will have everything ready to go when you’re ready to do your taxes or you can send the spreadsheet to your CPA.

Taxes and Finances For Teachers

When it comes to paying for classroom supplies, teachers have options to get reimbursed. However, many teachers spend upwards of $500 each school year, and sometimes more each semester. So, it’s important for teachers to find other avenues for potentially making money, such as investing. It can be difficult deciding to invest at first, but a wealth strategist can help you. Investments can help you more easily afford the extra things for your classroom, and may even put you in a better financial situation.

 

¹ “Deducting Teachers’ Educational Expenses” Anonymous irs.gov, April 27, 2021
² “Tax Tips for Teachers: Deducting Out-of-Pocket Classroom Expenses” Anonymous turbotax.intuit.com, July 23, 2021

Equitable Advisors, its affiliates and financial professionals do not provide tax or legal advice. The information presented here is for informational purposes only and provided based on our general understanding of the subject matter discussed. Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.