Educator's Deduction

Educators’ Deduction — This had expired at the end of 2003, but was restored for two more years. IR-2004-124 has more information.

About the Educator's Deduction

Is there a new tax deduction for Educators?

Learn about the new tax deduction starting in 2002 for educators.

The new deduction is available to eligible educators in both public and private elementary and secondary schools. They must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.

Taxpayers may subtract up to $250 of qualified expenses when figuring their adjusted gross income (AGI). They will not need to itemize deductions to get this benefit. Prior to the change in the law, educators could take such expenses only as miscellaneous itemized deductions, which must be reduced by two percent of AGI.

Educators who excluded education savings bond interest or payments from qualified tuition programs, or made tax-free withdrawals from an education savings account, will be able to claim the new deduction only to the extent their qualified expenses exceed the tax-free amounts.

Proof The IRS Requires

The IRS suggests that educators keep records of qualifying expenses in a folder or envelope with a label such as "Educator Expenses Deduction," noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.  Canceled checks, or bank statements and charge card statements along with the paid bill are needed if the IRS should ask you to prove your tax deductions.

Prepare for Your Adviser

Read through your checkbook, charge card statements and other methods you have used to pay for your classroom expenses.  All items can be included if you used them in the classroom or for your classes or grading.

• Awards
• Rewards
• Incentives
• Presentation materials
• Supplies
• Copies
• Consumables
• Administration or grading tools
• Computer equipment
• Computer software
• Computer services
• Other equipment

When we prepare your tax organizer be certain to place those costs in the appropriate section

Qualified Expenses

These are unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics.

To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the tax year.

The interest on qualified U.S. savings bonds that you excluded from income because you paid qualified higher education expenses, 

Any distribution from a qualified tuition program that you excluded from income, or 

Any tax-free withdrawals from your Coverdell education savings account.

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