Tax tips for teachers: Deducting out-of-pocket classroom expenses

The Educator Expense Tax Deduction

• You worked as a teacher, instructor, counselor, principal or aide for students in kindergarten through 12th grade.
• You worked at least 900 hours at a school certified by a state to provide elementary or secondary education. This applies to public, private and religious schools.

Qualifying educator expenses

• books,
• school supplies,
• computer equipment and software,
• athletic equipment for physical education teachers, and
• generally, any purchased item that is appropriate for and helpful to the students and classroom.

Keeping track of expenses

• Save your receipts in a separate file.
• Consider recording all eligible purchases in an appointment book or planner.
• Try using special colors or codes so that you can find them easily.

Claiming tax deductions

• A teacher can deduct a maximum of $250.
• Two married teachers filing a joint return can take a deduction of up to $250 apiece, for a maximum of $500.

• Your potential deduction isn't necessarily limited to $250 per teacher—so don't stop keeping track at $250. That's because your expenses in excess of $250 can count as "unreimbursed employee expenses."
• If you itemize, you can deduct unreimbursed job expenses that exceed 2% of your adjusted gross income.
• These include not just educator expenses, but also outside-the-classroom costs you paid from your own pocket, such as travel, investment costs, and union dues.

• The deduction for expense unreimbursed employee expenses is no longer allowed.
• You can still deduct up to $250 per person in qualified educator expenses.

Reducing your Educator Expense Deduction

• Interest on U.S. savings bonds that you were able to receive tax-free because you used the money to pay for higher education expenses.
• Distributions from 529 plans that you didn't report as income.
• Tax-free withdrawals from Coverdell education savings accounts.

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