The deduction for educator expenses, which expired on December 31, 2013, is retroactively extended for the 2014 tax year by the Tax Increase Prevention Act of 2014 (2014 Tax Prevention Act). This popular deduction recognizes that many education professionals purchase classroom supplies with their own money, and allows them to deduct up to $250 of certain out-of-pocket classroom expenses from gross income. Married taxpayers who file joint returns are entitled to a maximum deduction of $500, if both spouses are eligible educators and incur qualified expenses.
Instructors, counselors, principals, and classroom aides, as well as teachers, who work at least 900 hours during the school year, are eligible to take the deduction. However, qualifying individuals must work in a kindergarten, elementary, or secondary school through grade 12. Consequently, expenses for home-schooling do not qualify for the educator expense deduction.
The $250 deduction can be taken for items purchased at any time during the year. Teachers who have not spent $250 by the end of a year should consider pre-buying supplies for the following year, since any unused portion of the deduction cannot be carried over. Year-end purchases made while school is out for the holidays qualify even if the supplies are not used until the following year.
Classroom supplies, such as paper and pens, glue, and scissors qualify, as well as purchases of books and computer equipment, including software. For courses in health and physical education, the supplies must relate to athletics. The IRS has advised teachers and other educators to save their receipts and keep records of their expenses in a folder or envelope noting the date, amount, and purpose of the purchase.
If you have expenses exceeding $250 or have purchased non-classroom supplies, you may still take an employment-related miscellaneous itemized deduction subject to the two-percent floor.
We would be happy to answer any questions concerning your classroom related expenses, or any other provisions of the 2014 Tax Prevention Act. Please contact us at your earliest convenience to arrange an appointment.