Daycare Tax Tips

Educator Expense Deduction Still Available for 2013

Future Years in Doubt

This NATP news release from 2006 explains the benefits of the Educator Expense Deduction which can be taken on the front of an eligible individual's 2013 income tax return. This deduction was slated to expire at the end of 2011, but was reinstate for 2012 and 2013 as part of the fiscal cliff deal hammered out on January 1, 2013.

National Association of Tax Professionals (NATP) Appleton, WI - In a victory for teachers who frequently spend their own money on behalf of their students, Congress, in last-minute legislative action before year-end, approved an extension of the $250 tax deduction for teachers who incur expenses out of their own pockets during the 2006 and 2007 tax years. The president added his signature on December 20, 2006.

The educator (or teachers’ supply) deduction reduces adjusted gross income and can be used even if teachers do not itemize when preparing their taxes. It was set to expire in 2005. Qualifying educators (those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal, or aide for K-12) can once again deduct up to $250 in out-of-pocket expenses for items such as classroom supplies and instructional materials used in the classroom for private, public, and secondary schools.

"Schools are so strapped for cash these days. Not one of my clients who are teachers or teachers’ aides have not spent their own money in the classroom," says NATP member Nick Popolo, of Birch Tax Service in Staten Island, New York. For 2006, these expenses can be from anytime throughout the year, not just those that occurred after the date of the bill. Like any other claimed deductions, those claiming this deduction need records of the qualifying expenses, noting the date, amount, and purpose of each purchase. “For teachers that itemize their deductions, expenses in excess of the $250.00 cap can still be deducted as an unreimbursed employee expense on Form 2106 (Employee Business Expenses),” according to Leonard D. Rea, EA, CFP, of Sturbridge, Massachusetts.

The National Education Association estimates that each teacher spends an average of $450 per year of their own income for classroom supplies. The deduction is a nominal amount, but it’s something teachers really appreciate. “I've already had several calls from clients who are teachers, asking if the bill passed by Congress included their classroom expense deduction. They had been really upset that this little benefit might go away,” shares NATP member Rob Casey, an enrolled agent (EA) in Cumming, Georgia. NATP tax preparer Kurt J. Heinz, CPA, of Homer Glen, Illinois, adds, “As a tax preparer for several educators, I can say that they appreciate the tax relief this legislation provides, and were eagerly anticipating its extension.” Teachers can smile a little more now.

“For teachers in California this is a wonderful reinstatement because California had frozen its Teacher’s Tax Credit since 2002. This credit was due to reinstated for 2006, but unfortunately for teachers it will still be suspended this year. It is great for teachers to be recognized on the federal level for the hard work they do,” adds Carol Thomas, enrolled agent (EA) an NATP member from Inglewood, California.

When it comes to filing tax returns for 2006, teachers and taxpayers alike, need to not just fill in the blanks on their tax returns, but know to add applicable deductions to their tax returns. The IRS Form 1040s do not have a line to claim the educator’s deduction. (State sales tax and college tuition are two other deductions that will not have a line on which to claim a deduction.) The IRS stated that it will inform taxpayers as to how to fill out these items on their tax forms.

The educator’s deduction is a big sigh of relief for the nation’s educators; for the $250 deduction and for the acknowledgement that teachers dip into their own pockets for their students. “Originally signed into law in 2002 as part of the Job Creation and Workers Assistance Act, the deduction, not to be confused with a credit, provides a partial offset of the significant contribution that many teachers make towards supplies and other expenses,” notes NATP member Daniel Wishnatsky, CFP, of Phoenix, Arizona.

To find a professional tax preparer, look to a member of NATP, who subscribes to a stringent code of ethics and standards of professional conduct.

Members of the National Association of Tax Professionals (NATP) work at offices that assist over 11 million taxpayers with tax preparation and planning. The average NATP member has been in the tax business for over 20 years and holds a tax/financial designation and/or a college degree. NATP has nearly 18,000 members nationwide. Members include individual tax preparers, enrolled agents, certified public accountants, accountants, attorneys, and financial planners. Learn more at NATP is a nonprofit professional association founded in 1979 to serve professionals working in all areas of tax practice through professional education, tax research, and products. The national headquarters, located in Appleton, WI, employs a staff of 68.

Updated 27 November 2013

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