2007 Educator Tax Deduction

Tue, 25 Mar 2008 05:00:00 GMT

2007 Educator Tax Deduction

This information published March 2008 for the 2007 tax year.

Help Make Educator Tax Deduction Even Better
NEA is working to make the deduction permanent, expand the deduction amount, and to possibly change the deduction into a credit which lowers an individual's tax liability dollar for dollar, among other things. Tell your members of Congress to pass the Teacher Tax Relief Act (H.R. 549).

Educator Tax Deduction

The Educator Tax Deduction is $250 for the 2007 tax year and can be claimed on Form 1040 (line 23) or Form 1040A (line 16). Those filing the deduction do not have to itemize but do need receipts for their expenses.

NEA is working to make the deduction permanent, expand the deduction amount, and to possibly change the deduction into a credit which lowers an individual's tax liability dollar for dollar, among other things. (See details below.)

Who can take the Educator Tax Deduction?

The deduction is not limited to teachers. The Internal Revenue Service says you can take the deduction if, for the tax year, you were employed at a state-approved public or private school system and held one of a number of positions.

Among those eligible for the deduction are:

Teachers
Instructors
Counselors
Principals
Aides

Your position can be with any class from kindergarten through grade 12 as long as you work at least 900 hours during the school year.

What about home schooling? Sorry, but the tax law specifically states that costs for this type of instruction don't count toward the educator-expenses deduction.

What Items Are Deductible?

IRS guidelines for deductible items are broad. You can count unreimbursed costs for books, supplies, computer equipment (including software and services) and other equipment and supplementary materials used in the classroom.

The IRS also 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 buying a videotaped production of "Death of a Salesman" to help drive home Arthur Miller's points to your students would likely meet tax muster. But purchasing a new television upon which to watch it instead of using your school's working-but-old Zenith may raise some IRS eyebrows.

Circumstances Could Limit Expenses

In addition to the eligibility requirements, the IRS also sets limits on the money spent on school supplies. Most notable is the restriction that could affect teachers who are continuing their own educations. The IRS says when an educator uses any tax-favored funds to pay for his or her own schooling, those amounts must be subtracted from the total the teacher claims under the new deduction.

Take for example Joe Jones, a high school English teacher who is working toward his master's degree in literature during school breaks. He cashed in savings bonds to pay his tuition and excluded the bonds' $150 interest from tax. He also spent $200 for books on Shakespeare to distribute to his 11th-grade students. He must subtract the $150 in tax-free interest from the $200 for the books, leaving him only $50 to claim under the educator's expense deduction.

The same rule applies to nontaxable earnings a teacher gets from qualified state tuition programs or tax-free withdrawals from a Coverdell education savings account.

Related Resources from the IRS

Details of NEA's Lobbying Efforts

NEA supports S.505 and H.R.549, which amends the Internal Revenue Code to:

increase the allowable tax deduction for the expenses of elementary and secondary school teachers to $400;
allow the deduction of professional development expenses; and
make such deduction permanent.

NEA supports S.1727, which amends the Internal Revenue Code to allow elementary and secondary school (K-12) teachers a tax credit for 50% of their education expenses (books, supplies, computer equipment, and supplementary materials) and their professional development expenses up to $300 in any taxable year.

NEA supports H.R.4057, which amends the Internal Revenue Code to:

extend until 2015 the tax deduction for certain expenses of elementary and secondary school educators (i.e., teachers, instructors, counselors, principals, or aides);
increase to $500 the allowable amount of such deduction for full-time educators (working at least 900 hours during the school year); and
allow such tax deduction for educators in preschool programs.

NEA supports H.R.3605, which amends the Internal Revenue Code to:

increase the allowable tax deduction for the expenses of elementary and secondary school teachers to $500;
allow the deduction of professional development expenses; and
make such deduction permanent.

Members and Educators

2007 Educator Tax Deduction