Are you a teacher or other educator who often pays for classroom supplies out of your own pocket? Your main objective is to improve the learning experience of the kids, but there may be a residual side benefit. If you qualify, you can claim a special deduction — the educator expense tax deduction — of up to $300 on your federal tax return.
But this tax break isn't automatic. Let's dig a little deeper into the key rules.
The educator expense deduction is generally associated with teachers, but it's available to some others in a similar line of work. Specifically, someone who works as a teacher, instructor, counselor, principal or aide for students in kindergarten through 12th grade may claim the deduction. So, for instance, a guidance counselor who provides college prep materials to high school juniors may qualify.
To receive the deduction, you must work at least 900 hours during the year at a school certified by a state to provide elementary or secondary education. This applies to private and religious schools as well as to public schools. Finally, you must cough up the money for the expenses yourself — it can't come from another source.
Some educators don't qualify for the deduction, including preschool and day care teachers, camp counselors, college professors and other higher education instructors, self-employed tutors, and part-time school aides who don't meet the minimum 900-hour requirement. Nor can you claim the deduction if you're a parent homeschooling your kids.
The list of qualified expenses includes:
Important: You can deduct classroom expenses only if you're not reimbursed for them. If a school, teachers' union, parent-teacher association or person repays you for what you spend on classroom materials, you can't deduct the cost.
The maximum educator expense deduction for a qualified educator in 2023 is $300. This may seem like chump change, but at least it was raised from $250, beginning in 2022.
In addition, the maximum deduction is doubled to $600 for the year if a married couple files a joint return — as long as each spouse qualifies separately. For instance, say a teacher is married to a principal. In 2023, the teacher spends $400 on qualified expenses and the principal spends $200. In this case, the deduction is limited to $500 ($300 for the teacher and $200 for the principal).
Best of all, the deduction is claimed "above the line" on Form 1040. This means you can benefit whether or not you itemize deductions, which isn't the case for mortgage interest deductions and state and local tax (SALT) deductions, for example. This effectively reduces your adjusted gross income (AGI) for other tax purposes.
Note: Previously, you could write off excess expenses incurred as miscellaneous expense deductions, subject to a 2%-of-AGI floor. But the Tax Cuts and Jobs Act (TCJA) suspends the miscellaneous expense deduction for 2018 through 2025. As a result, this factor won't come into play again until 2026.
To obtain the deduction, it's important to keep good records of your out-of-pocket expenditures. Accordingly, you should:
Finally, under some circumstances, you may have to reduce the educator expense deduction. The IRS says you must subtract the following three items from your deduction:
Your tax advisor can answer any questions you may have about this deduction — or provide any other guidance you need.
Get in touch today and find out how we can help you meet your objectives.
