We've always asked a lot of our teachers. We've been asking more during the COVID-19 pandemic.
But at least they are getting a bit of tax help this filing season thanks to a tweak to the educators' tax break.
Now teachers and other qualifying school personnel can count some coronavirus out-of-pocket expenses when they claim the $250 deduction on their returns.
That added spending option was included last December's Consolidated Authorization Act, 2021 that combined government funding, COVID-19 relief and some expiring tax provisions. You might remember it as the bill that provided a second $600 economic impact payment.
This week, the Internal Revenue Service spelled out exactly what that expansion means.
Long-time, albeit limited, teachers' tax break: The educators expenses write-off has been available since 2002. When it was created, it was a temporary tax break that had to be periodically renewed, or extended (hence, these provisions are dubbed tax extenders).
In 2015, teachers and other school staff no longer had to worry whether they might lose this above-the-line deduction due to congressional action or, as often, inaction. That year, the Protecting Americans from Tax Hikes, or PATH, Act, made the teachers' expenses deduction a permanent part of the tax code.
The 2015 law also allowed for potential annual inflation increases in the deduction amount, which officially for tax-computing purposes an adjustment that can lower your income. Unfortunately for teachers using this tax benefit, inflation has been low since the law change. In fact, it's been stuck at $250, although studies show that amount is not nearly enough to cover teachers' out-of-pocket classroom costs.
Still, in tough financial times, any tax break is welcome. And now teachers can use classroom coronavirus costs toward the deduction.
COVID-19 cost details: The IRS on Thursday, Feb. 4, issued Rev. Proc. 2021-15, which spells out what additional unreimbursed expenses educators now can claim in connection with the $250 deduction.
Eligible COVID-19 protective items purchased for use in classrooms include, but are not limited to:
- face masks;
- disinfectant for use against COVID-19;
- hand soap;
- hand sanitizer;
- disposable gloves;
- tape, paint or chalk to guide social distancing;
- physical barriers (for example, clear plexiglass);
- air purifiers; and
- other items recommended by the Centers for Disease Control and Prevention (CDC) to be used for the prevention of the spread of COVID-19.
Note that final bullet point. That means there's some leeway for expenses as things changed during our dealing with the virus.
So if you're a teacher, be sure to do your homework regarding potentially deductible educator expenses. A good place to start is the CDC's page on Strategies for Protecting K-12 School Staff from COVID-19.
And since this change wasn't signed into law until Dec. 27, 2020, if you have coronavirus costs you can count and need them to max out the $250 claim, you need to go back through your records to find the qualifying amounts.
You don't, however, have to go all the way back to the start of 2020 to find receipts for personal protective equipment (PPE) if you were ahead of the pandemic preparation curve. The IRS revenue procedure says that eligible unreimbursed COVID-19 classroom expenses are those that were paid or incurred after March 12, 2020.
Original expenses still count, too: If your school district took care of coronavirus safety measure for you and your fellow teachers and students, great! That means your other out-of-pocket payments to enhance your pupils' learning experience can count toward the $250 deduction.
This includes unreimbursed costs for books, supplies, computer equipment (including software and services), and other equipment and supplementary materials used in the classroom. If you teach courses in health or physical education, the eligible expenses must be for athletic supplies.
On a more personal level, a couple of years ago the eligible expenses list was broadened to include the cost that educators incur as part of professional development courses.
But don't go overboard. The IRS applies its ordinary and necessary rule here. To be considered ordinary, an item purchased for your classroom must be something that is common and accepted in the education profession. A necessary expense is one that is helpful and appropriate, but it doesn't have to be required to be considered necessary.
So while you might be able to argue that a portion of your Disney+ subscription should be deductible because you logged in to show your American history classes "Hamilton," the IRS is likely to look askance (like Alexander did facing Angelica's questions in "Satisfied"; sorry, I couldn't resist) if you tried to claim part of the cost of the new 49-inch video screen you bought to view it.
Defining educators: While this tax break often is called the teachers' expenses deduction, it actually applies to a broader group of school employees.
An eligible educator for purposes of this tax break is any individual who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during a school year.
And yes, there is an IRS definition of school, too. It is any school that provides elementary or secondary education, as determined under state law.
Maximum deduction and limits: While the educators' tax deduction is a maximum $250, that's per person.
If you and your spouse share education careers, you could get double the deduction on your joint tax return. But you do have to figure the amount using each teacher's expenses separately.
For example, if you spent $350 on school supplies and your spouse spent $150 for his or her classroom, you can deduct only $400 on your jointly filed Form 1040 even though your combined education expenses were $500.
And there are some limits on the tax break. Most of these are to prevent tax break double dipping, i.e., using one tax benefit to get an additional one.
In the case of the educators' deduction, expenses are deductible only to the extent that they are more than the following other amounts for the tax year:
- The interest on series EE and I U.S. savings bonds that you exclude from income because you paid qualified higher education expenses,
- Any distribution from a qualified state tuition program that you exclude from income,
- Any tax-free withdrawals from your Coverdell education savings accounts,
- Any reimbursements you receive for expenses that aren't reported to you in box 1 of your W-2.
Claiming the educators' deduction: OK, you're ready to claim your $250 deduction. The good news is, as mentioned earlier, this is what is known as an above-the-line deduction. That means you don't have to itemize to claim it.
However, form revisions following 2017's major tax reform law do mean that you must claim it on Form 1040 Schedule 1. You'll find the educators' tax credit there on line 10, highlighted in the schedule excerpt below.
Again, it's not that much in the grand tax scheme. But every income adjustment/tax deduction helps.
You also might find these items of interest:
- Getting the tax info needed to complete FAFSA
- Don't overlook student loan tax break on amounts paid before COVID relief
- 529 plans, other tax breaks help cover education expenses, even during a pandemic
|Coronavirus Caveat & More Information
In 2021, we all still are dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.
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