Q: Tax Playa, I am a teacher in a government school. What giveaways to the unions did Clinton manage to sneak into the tax code for me?
Amy, Alexandria VA
A: All employees are allowed to take a deduction for "unreimbursed employee business expenses." However, this is unavailable to most due to strict limits. Teachers, however, can take a deduction for up to $250 of unreimbursed expenses as an adjustment to income, meaning it is available even to non-itemizers...
If you are an eligible educator, you can deduct up to $250 of qualified expenses as an adjustment to income. If a married couple has two eligible educators, the limit is $500 (strictly speaking, $250 for each educator). Any expenses above and beyond this limit fall under the unreimbursed employee business expense rules (see the topical index to the right).
Eligible Educator: a Kindergarten through Grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours in a calendar year.
Qualified Expenses: ordinary (one that is commonly accepted in the education field) and necessary (helpful and appropriate for your profession as an educator) expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom.
Qualified expenses exclude home schooling expenses and non-athletic supplies for courses in health or physical education.
Qualified expenses must be reduced by:
- excludable interest from U.S. Series EE and I savings bonds reported on Form 8815
- non-taxable 529 plan earnings
- non-taxable Coverdell ESA earnings
- reimbursements for the supplies from your employer not reported on your W-2
Please send me a link if I'm wrong, but I thought this deduction expired 12-31-2005 and has yet to be extended. Was it extended and I missed it? I'm hoping it will be extended - there's still time.
P.S. I love reading your blog posts!
Posted by: Gina | 2006.10.28 at 11:20 AM
Everyone assumes that this is going to be extended in the lame duck session. I'd be shocked if it were not.
Posted by: Ryan Ellis | 2006.10.28 at 01:39 PM