New Deductions for Teachers

One of the tax changes that resulted from the Job Creation and Worker Assistance Act of 2002 is the educator expense deduction. This above-the-line deduction allows eligible teachers of either public or private elementary and secondary schools to deduct out-of-pocket expenses for classroom supplies, books, computer equipment, and other supplementary materials. To be considered eligible, they must work at least 900 hours during the school year as a teacher, instructor, counselor, principal or aide.

When figuring their adjusted gross income (AGI), up to $250 of qualified expenses can be subtracted on line 23 of the 1040 and line 16 of the 1040A. Any out-of-pocket expense above $250 can be claimed on the Schedule A under miscellaneous itemized deductions, and reduced by two percent of AGI. Before the Job Creation and Worker Assistance Act, the Schedule A was the only place for a teacher to claim a deduction for out-of-pocket qualified expenses.

To help teachers remember how much they spent during the year to accurately determine the amount of the deduction, the IRS recommends they keep all receipts and note the purpose of each purchase. This will also be helpful in the event of an audit by the IRS. More details on this new tax law change can be found in IRS Publication 3994 “Highlights of the Job Creation and Worker Assistance Act of 2002.”