Don't Mess With Taxes

Coming back from an appointment today, I saw school buses roaming my neighborhood. Classes for my local school district start Wednesday, so I guess the drivers were just on reconnaissance runs.

Students, their parents, and of course teachers are making preparations, too, not just here in the Austin, Texas, area, but nationwide.

Much has been written (or, in my case, blogged) about state sales tax holidays (a few are still on the horizon) and the savings on school-related items. In most cases, we tend to think of students and their families taking advantage of the no-tax events.

However, teachers also spend some of their own money to make classrooms more entertaining and informative.

And this year, those educators finally get a bit bigger tax break for their out-of-pocket educational expenses.

$50 hike for educators' expenses deduction: The educators expenses write-off has been available since 2002. When it was created, it was a temporary $250 tax break that had to be periodically renewed, or extended.

In 2015, teachers and other eligible school staff no longer had to worry whether they might lose this tax break. That year, the Protecting Americans from Tax Hikes, or PATH, Act, made the teachers' expenses deduction a permanent part of the tax code.

The PATH Act also allowed for potential annual inflation increases in the deduction amount. Still, low inflation kept the tax break stuck at its $250 per qualifying educator level.

Until now. This year, one of the few silver linings of rising inflation is that the teacher expenses tax break finally gets a $50 bump.

Eligible educators can claim up to $300 of qualifying expenses on their 2022 taxes. Where two teachers are married, they can claim a possible $600 on their joint tax return.

Note, however, for the wedded educators, the $300 per person limit still applies. So if one teacher spent $400 and the equally educational spouse spent $200, the couple can only claim $500. That's $300 for the bigger shopper and $200 for the husband or wife.

Still not enough: Even with the 2022 increase, the $300 isn't going to cover all their own money that teachers willingly spend to enhance their students' learning experiences.

My eLearning World, a publication focused on educators, reports that nationwide, teachers will spend about $3 billion of their own money on classroom supplies during the 2022-2023 school year. That's the largest amount ever, and averages to $820 per teacher.

Still, taxpayers long ago learned the lesson that every tax break helps.

More than just classroom teachers qualify: This tax break often is popularly referred to the teachers' expenses tax break. But technically, it's not limited to those who proudly carry that classroom title.

It's officially for out-of-pocket expenses incurred by educators. And according to the Internal Revenue Service's tax break dictionary, eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during the school year.

Both public and private school educators qualify. Home-school teachers do not qualify.

Itemizing not necessary: One of the more-welcome features of the educators' expenses tax break is the ease of claiming it.

It leads off the many adjustments to income (still referred to by most of us in the tax community as above-the-line deductions) listed on the second page of Schedule 1, as shown on the highlighted excerpt below.

Click on image to see the full Schedule 1 in PDF form. You can find more tax form posts at the ol' blog's special Talking Tax Forms page.

There are no percentages of adjusted gross income to calculate. Just claim your classroom-related costs up $300 and attached Schedule 1 to your Form 1040 when you file.

But what if you do still itemize other deductible expenses? That's OK. You also can claim any above-the-line deductions, like the educators' out-of-pocket costs, for which you qualify.

Costs to claim toward the deduction: Now that you don't have to worry about your deduction method, it's time to focus on what counts as a qualifying educator's expense.

The usual school items — books, supplies, and other materials used in the classroom — are among the costs educators can claim.

So are unreimbursed costs of instructional equipment, including computer hardware, software, and services.

The COVID-19 pandemic also prompted the addition of coronavirus protective items designed to stop the spread of the disease in the classroom.

This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers, and other items recommended by the Centers for Disease Control and Prevention.

Teachers' own education costs count, too: Another welcome addition to the allowable educators' expense list is the cost of professional development courses. As long as they are related to the curriculum they teach or the students they teach, those costs count toward the $300 tax break.

But, notes the IRS, don't overlook another tax break here that might be more beneficial. Educators' personal continuing education expenses also can be claimed as part of the Lifetime Learning Credit. Here you can claim up to 20 percent of the first $10,000 of qualified education expenses. If you're not a math teacher, that's a maximum of $2,000 per return, a substantial jump from the $300 out-of-pocket deduction.

Even better, the Lifetime Learning Credit is, as its name says, a tax credit. This makes it a dollar-for-dollar offset of any tax you owe. More on this credit is in IRS Publication 970, Tax Benefits for Education.

Again, home schooling costs don't count. Neither do nonathletic supplies for courses in health or physical education.

And while claiming the educators' expense is not as intensive as itemizing, you still need to keep good records of your qualifying expenses. This means receipts, cancelled checks, and other documentation.

You also might find these items of interest:

• 6 tax-smart financial gifts for grads (and the givers)
• COVID PPE counts toward teachers' expenses tax deduction
• Some tax breaks educators can claim beyond Teacher Appreciation Day and Week

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