Tax Tips for Teachers [VIDEO]

Everyone has to pay them, and those who don’t, end up going to jail. And still paying them.

Income Taxes.


But as a teacher, you have some unique credits and deductions that are available to you. This information will help as you wrap up the year and plan for paying your taxes. Or if you are planning out your personal and professional expenses for the next year, be sure to keep these tips in mind.

We talk with Anthony Baldassano, CPA of Anthony & Associates in Barrington, IL to find out his top four tax tips for teachers. During our discussion, it also triggers a bonus tip, so be sure to watch for that at the end. If there are any questionsm please feel free to reach out to Anthony or Dave.



Document featuring the full list of deductions Anthony discussed: Deductions for Teachers

Dave:     Have you ever wondered about taxes and how that all affects you with the end of year planning? Well look no further. We have got an accountant with us today and he’s going to going to take us through some things today that are pertinent to educators. We are joined today by Anthony Baldassano, CPA. Anthony, what things should educators be looking for?

Anthony:         Well, the first part is probably one that most people know about, but it’s important to bring up, and that’s the educator expense deduction. Teachers are allowed $250 worth of reimbursed classroom expenses such as lesson planning materials, classroom supplies, anything that’s paid out of pocket that’s used in the classroom. Other examples can be stationery, classroom prizes, a briefcase, stopwatches, decorations, and things like that.

The good thing about that is that it’s an above the line deduction (and not being technical), but basically it means: if you don’t itemize, then you take the standard deduction and you’re still allowed to take these deductions as well.

If your spouse is also a teacher, you can get a maximum of up to $500. So for example, if you have $400 expenses and your spouse has a $100, you can deduct two-fifty for yourself and a hundred for your spouse. So that totals three-fifty, not five-hundred.

Dave:               Now, those are some good classifications. I think that’s important, too. We have a lot of young teachers who watch. So, even if you don’t itemize, you can still use this, which I think is the key.

Anthony:         Correct; exactly. Then, the next big area is what I call unreimbursed employee deductions. These are items that you would take on your itemized deductions form, which is also called these are miscellaneous deduction. I’m not going to get in to the mechanics of how to take that, but that’s something you could address with your tax preparer.

I just want to go through some of the ones that you would want to consider. First would be books and newspapers. If you have personal books or magazines subscription for your personal professional library or the classroom library, you deduct those.

Mileage tracking: You can deduct mileage. For 2013, the mileage deduction is fifty-six cents a mile. So if your teaching position required travel, from school to school maybe, or to students’ homes, you can deduct that mileage. If you have to use your own car for school purposes like driving to field trips, competitions, sporting events, that mileage may be deductible as well.

Dave:               I just want to say one clarification there. I had this question come up with mileage. It doesn’t include commuting. That doesn’t count.

Anthony:         Right, exactly; very good point. Even if you live fifty miles away or whatever, you cannot deduct commuting to work. Good point.

Software and computer equipment. That’s another area to look at. You can claim the cost of classroom software and computer equipment that you use for planning purposes.

You want to keep a diary. I mean, anything we talked about today, we want to have a log or keep the receipts for that. It’s very important.

Dave:               So when does it kind of blur the lines of, “Okay, I bought a software package. I bought Word on my computer at home. Yeah, I use it for school, but I also use it for personal use,” how does that play out?

Anthony:         Well, it’s kind of facts-and-circumstances, but generally, if it’s something that there is a business purpose for it—for example, you probably need to have Word at home. Generally, a lot of times, employers as well as school will give you a copy of Microsoft Office. So, check that you might not have to buy it. So it may be available for you from school, I would say that that’s not going to be deductible for that certain copy.

One thing that you’ve got to watch for (and I’ve seen some aggressive tax preparers) is push for home office deductions. So, for example, if a teacher has a room: a third bedroom or second bedroom, and they use that as an office to grade papers, prepare lesson plans, and things like that, then they’ll say, “You can take the home office deduction.” I would err to say that that is probably not recommended.

Generally, in most schools, you have a desk that’s your place of business.

Dave:               So you mean, when my wife grades papers and they are all over the couch, that’s not counted as a home office deduction?

Anthony:         Well, yeah, probably not. Yes. Another area would be school loan interest. Student loan interest. So, a teacher may be able to do that. Again, this is above the line deduction, so it’s very similar to the educator tax deduction where you can tax it regardless of whether you itemize it or not.

So, for the younger teachers out there, you probably have a lot of school debt, or maybe student loans, this is definitely one you want to take.

Dave:               Alright. So what if we’ve got some older teachers who are watching and they’re paying their kid’s way through school. How does it work when parents are paying those loans, too? Do they get to deduct that as well?

Anthony:         They do, actually. Yeah, you can deduct it. The parent that paid it, they don’t have to be an educator in school or anything like that, but the general rules will allow that the parent can deduct the expense on their debt.

Dave:               Okay, that’s good to know.

Anthony:         And then the final one I want to talk about is the education credits and deductions. So, teachers that are professors or anyone who’s looking to renew their teaching license or improve their skills, they can take the lifelong learning credit.

And then there’s another option which is the tuition and fee deduction. So, it’s a credit or a deduction. Again, (we don’t have to go in to that) you want to talk with your tax professional on that. I just want to make you aware that you can deduct any type of professional development expenses with that credit. So it’s really good.

Dave:               I think another important part along with that is, I know some districts reimburse education expenses. Some are saying, “You know what, this is on your dime.” So, and correct my understanding if it’s wrong, if it’s reimbursed with that, you’re not eligible for any credits on that side because you didn’t actually pay for it. You don’t get reimbursed.

Anthony:         And that’s an excellent point. Any of the things we talked about, whether they’re a deduction, any type of reimbursement that you get from the district, you cannot deduct them. Let’s say, if you get a stipend or some type money that is added to your salary, well then you can do it because you’re paying tax on it.

There’s a kind of bonus here. I didn’t put it in my notes, but you just kind of made me think about it. If you do any type of side work or anything where you’re going to get a 1099 (so if you do some consulting or something that instead of issuing a W2, you get a 1099), that opens a whole other door of opportunity to deduct a lot of expenses we talked about here, from mileage and supplies, and things like that.