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If you’re a teacher, chances are you’re not paid enough — and you pay out of your own pocket for some of the things you need to teach your students.
The average public school teacher salary for the 2017 to 2018 school year was around $60,483, the National Education Association estimates. Meanwhile, a whopping 94% of public school teachers spent an average of $479 of their own money for their classrooms during the 2014 to 2015 school year, according to a 2018 study by the U.S. Department of Education.
Fortunately, the IRS offers a little help in the form of its educator expense deduction. This tax break can effectively reduce your adjusted gross income, or AGI. Not every educator and expense is eligible for the deduction, however, so it’s important to know what the tax code says.
What is the educator expense deduction?
If you’re eligible, this tax break allows you to deduct up to $250 in eligible unreimbursed classroom expenses from your gross income. If you’re married filing jointly, and both you and your spouse are eligible educators, you can deduct up to $500 total (although not more than $250 each).
This deduction is called an “above-the-line” deduction, meaning it reduces your AGI instead of your taxable income. You don’t have to itemize deductions on your tax return to claim the educator expense deduction. But the IRS has changed the 1040, so now you’ll need to use Schedule 1 to claim this deduction.
Your AGI helps determine whether you qualify for certain tax deductions and credits. Your taxable income, on the other hand, is the figure the IRS uses to determine your tax rate and how much you may owe.
What is adjusted gross income?
Adjusted gross income is essentially your gross income minus certain adjustments the IRS allows you to take. Calculating AGI is the basis of figuring how much tax you pay.
How do I know if I qualify?
The deduction is only available to qualified educators who meet certain requirements for the tax year for which they’re filing. Specifically, you need to be a K–12 teacher, instructor, counselor, principal or aide for at least 900 hours during the school year.
Also, your school must provide elementary or secondary education as determined under your state’s law.
Which expenses are eligible?
Depending on the nature of your classroom and out-of-pocket expenses, there’s no guarantee you’ll be able to deduct everything. Here’s what the IRS considers eligible.
- Classroom supplies
- Computer equipment, including software and services
- Other equipment
- Professional development course fees
- Supplementary materials for your classroom
If you teach health or physical education, the only supplies that count are athletic supplies.
Remember that even if all your expenses qualify, you’re limited to deducting just $250 of the total amount. You’ll also need to reduce your educator expense deduction by the following:
- Excludable series EE and U.S. Series I savings bond interest
- Nontaxable qualified state tuition program distributions
- Nontaxable withdrawals from Coverdell education savings accounts
- Any reimbursement you receive for a qualified education expense, even if the reimbursement isn’t reported on your W-2
How the Tax Cuts and Jobs Act affected educator expenses
The sweeping 2017 tax reform bill made a lot of changes, and Congress did consider altering the educator expense deduction.
The Senate proposed doubling the deduction limit to $500, while the House of Representatives wanted to eliminate the deduction altogether. In the final bill, however, the two agreed to keep the deduction as it was.
That said, teachers used to be able to include unreimbursed work-related expenses that exceeded $250 as an itemized deduction, as long as those expenses exceeded 2% of their adjusted gross income. The new tax law suspended that option between Jan. 1, 2018, and Dec. 31, 2025.Learn how tax reform could affect your 2018 tax bill
How to take advantage of the deduction
You can claim your educator expense deduction when calculating your adjusted gross income. If you need help with the process, Credit Karma Tax® can crunch the numbers for you.
It’s important to keep track of your expenses long before you file your return, so you don’t have to scramble at tax time. Also, hold on to your receipts in case your accountant or the IRS wants to check your work.
If you do these things in the moment rather than waiting until the last minute, it’ll be easier to know whether the expense is eligible and how much you can claim.
Teachers don’t spend money out of their own pocket for the tax benefits; they do it for their students. The educator expense deduction may not come close to how much of your own money you spend on your students and classroom every year. But if you qualify for it, there’s no reason not to take advantage of the deduction.
Because the deduction reduces your AGI, it could help lower your taxable income, trim your income tax or even increase your tax refund.
Relevant sources: National Education Association: Rankings of the States 2018 & Estimates of School Statistics 2018 | IRS: Topic No. 458 Educator Expense Deduction | IRS Schedule 1 | IRS: Now you can buy U.S. Series I Savings Bonds for anyone with your tax refund | IRS Publication 529: Miscellaneous Deductions | The Tax Cuts and Jobs Act of 2017