Low pay and overwork top the reasons that 85 percent of K-12 educators are considering a job change, according to a recent EdWeek Research Centersurvey.
With that in mind, we’ve collected practical advice to help teachers and administrators hold on to more of their earnings this tax season.
The big tax news for educators this year is that the Internal Revenue Service has expanded the educator expense deduction, from $250 to $300. The change marks the first increase since the deduction was introduced in 2002.
Keep reading to find answers to questions on the deduction, potential additional tax relief for educators on the horizon, and other tax-related saving measures available to many educators this filing season.
What expenses does the educator expense deduction cover?
The following items may be deducted, according to the IRS:
- classroom supplies;
- computer equipment;
- software and services;
- COVID-19 protective items such as face masks, disinfectant, hand soap, hand sanitizer, disposable gloves, tape, and other related risk-reducing items recommended by the Centers for Disease Control and Prevention;
- professional-development courses related to curriculum and/or students who an educator teaches.
Who is eligible for the educator expense deduction?
K-12 teachers, instructors, counselors, principals, or classroom aides, according to the IRS.
Do part-time educators qualify?
To qualify, educators must work a minimum of 900 hours a school year. Some part-time employees may meet this requirement.
Can educators claim the deduction for a purchase that’s been reimbursed by another source, such as an employer or a grant?
No. The deduction can be claimed only for expenses not reimbursed by other sources.
If two qualified educators are married, can they both claim the deduction?
Yes. If both spouses are educators and they each spend a minimum of $300 on eligible out-of-pocket expenses, they can claim a total of $600 on their year-end tax return.
Increase aside, the deduction remains far less than what most teachers spend out-of-pocket each year. Are there efforts to further increase the deduction?
Yes, advocacy organizations are currently lobbying to raise the deduction significantly.
The Association of American Educators, a national non-union teaching association, has called on Congress to increase the amount to $1,000. Of this, $400 would defray the unreimbursed costs for home internet and broadband access that have become essential to educators since the pandemic.
“The educator expense deduction remains a popular and well utilized deduction, but falls short of the nation’s obligation to support America’s educators,” said Colin Sharkey, the association’s executive director.
The IRS reminds educators to keep their receipts as proof of their spending. For how long?
Educators should keep their receipts three years from the date their tax returns are filed, said tax attorney James Creech of the accounting and consulting firm Baker Tilly. He also advises educators to keep records, as needed, that show a causal connection between a purchase eligible for deduction and its use. For example, if an educator attends a professional conference in Las Vegas in July and plans to deduct the cost of the hotel, he suggested keeping a record of conference attendance in case questioned by the IRS about whether the lodging was a legitimate business expense (and not a personal vacation).
Is it worth the hassle for educators to prepare their own tax returns, as opposed to having a professional do it?
Creech suggests that, for educators with relatively simple tax returns involving just one W-2 (or two, for a two-income household), the process is relatively straightforward, especially given the wide availability of electronic do-it-yourself filing programs. If, however, an educator has one or more part-time jobs or side hustles—and many do—filing becomes more complex and Creech suggested using Excel throughout the year to keep track of the additional income.
“It’s really best to use software to do taxes,” Creech said. “It lets you e-file, which is incredibly preferred, almost mandatory, with delays in processing. It reduces the likelihood of [the return] getting lost, and provides acknowledgement that the IRS has received it.”
Creech also pointed out that tax software programs are relatively easy to use, providing user with prompts regarding the precise information required by the IRS.
“It doesn’t take that long. It’s not an all-day thing,” Creech said. “The challenge can be psyching yourself up and not procrastinating, versus the actual difficulty [of putting in the information].”
How much of a cost-savings is it to file your own taxes?
Tax software programs generally cost no more than $100, said Creech. But there’s a tax preparation program from the IRS that’s free for those who qualify. IRS Free File is available to taxpayers whose adjusted gross income is $73,000 or less, which qualifies many educators. Made possible through a public-private partnership between the IRS and tax preparation and filing software industry companies, the program provides online tax preparation and filing at approved partner sites, free of charge.
“That [IRS Free File] would be my starting point, especially for a single [qualifying] teacher,” Creech said. “You might not realize you have this completely free option.”