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Tax Tips For Teachers 2018

By Author: Lauri Pitcher, CPA
Total Articles: 4

To our teachers and school administrators, we appreciate everything you do to curate an awesome and enticing curriculum for the next generation. Now it’s our turn to educate you on one matter…taxes. One thing is clear, it’s never too early to start planning for the upcoming tax season! Check out the following tips to help you as an educator stay on top of your taxes and get the biggest breaks and tax deductions ever!

Tax Benefits as an Educator

Did you know, as an educator you can catch a break and significantly reduce what you pay in taxes? Yes, the IRS has 3 exclusive work-related tax benefits for teachers that helps reduce the amount of taxes you forego. This includes out of pocket expenses (books, supplies, travel, etc.), further education or vocation, and special tax credits. Below is a breakdown of these tax benefits.

Get a Tax Break for Classroom Supplies

In many school districts throughout the United States, teachers themselves must supply their classroom with certain amenities – books, writing supplies, and more. We understand how tight a budget that can be, especially when you need to replenish missing pencils and notebook paper on an everyday basis. That’s where a tax break comes in. There’s two that you can choose from – the educator expense deduction and itemizing deductions (using Schedule A).

The educator expense deduction is good up to $250 ($500 if you’re filing jointly and your spouse is also an educator) for unreimbursed education expenses. Eligibility is easy for most educators. To be eligible, you must be a certified teacher or administrator working in a state approved elementary or secondary education, with at least 900 hours clocked per school year. To claim this deduction, you’d need to fill in Line 23 on Tax Form 1040 (if you’re amending your taxes Line 16 on Tax Form 1040A). The deduction covers the costs of books, supplies, equipment and supplemental materials purchased throughout the school year.

Do you feel like you’ve spent more than $250 on your classroom in the past school year? That’s where planning ahead comes into play. It’s only the beginning of the school year, so keeping track of your classroom expenses should be relatively easy. We and the IRS encourage you to record all your classroom expenses and total it up as a miscellaneous deduction on Schedule A when filing your Tax Form 1040 or Tax Form 1040NR. You can include in this deduction other work-related expenses, such as union dues, educational subscriptions, licenses and more. This deduction does have a 2% limit as outlined by Publication 529. You must subtract 2% of your adjusted gross income from your qualifying miscellaneous deduction amount.

Learn what Tax Credits to take Advantage of

As an educator, you get exclusive access to various educational tax benefits. The most notable is the Lifetime Learning Credit and in some instances, the American Opportunity Tax Credit.
The Lifetime Learning Credit (LLC) is for both students and teachers alike. This credit covers tuition and related educational expenses. To qualify you must be a student or teacher at an approved educational institution and have purposed educational expenses. The maximum return for this credit is $2000. Unlike other credits, the LLC can be claimed every year you’re teaching.

Typically, the American Opportunity Tax Credit (AOTC) is for qualified educational expenses by a student enrolled in a higher education. So, if you’re a teacher pursuing a higher degree while teaching you too can take advantage of this credit. The AOTC is 100% good up to the first $2000 you have in educational expenses and 25% of the remaining balance from thereafter. If this credit marks down the amount of tax you owe to zero, you’ll get a refund up to 40% (maximum $1000) of the remaining amount of credit.

Staying Organized Helps a Lot

Do you hate tax season, knowing your lack of organization beforehand really takes its toll? Stay on top of your taxes and expenses now! You don’t want to be the person who files a tax extension and waits until last minute on October 16, 2017 to finalize their tax returns. As an educator, you should be weary of this happening and take the right steps to avoid missing deductions come tax time.

Make sure when you’re recording your work-related expenses, you note the date, amount and purpose of each purchase. This will help you stay on top of your deduction amount, and fight any disputes the IRS makes on your tax refund.

For the future, don’t throw out your tax returns for at least 3 years. These documents are important for many uses, such as apply for financial aid, getting a loan and more. You can also get a Free tax transcript from the IRS, which summarizes your return information and includes all adjusted gross income.

With these tax tips you know now to stay on top of your taxes and keep up to date with them until tax season rolls around. Do this every year and you’ll never have a problem getting the biggest tax deductions and refunds. You might be the educator, but you surely didn’t know these work-related tax benefits. For more information and solid tips on the upcoming tax season, be sure to contact us online or by phone at (800) 614-0139.

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