The country’s educators have many tax credits and deductions that can limit their tax liability. However, it is difficult to keep track of all of the tax deductions a teacher can and cannot claim. Many tax deductions depend on whether a teacher is earning income from self-employment or from working for an institution. A teacher can deduct education expenses as business expenses, but only if they are self-employed. If a teacher is not considered self-employed, they will need to itemize their deductions to claim education expenses.
Expenses cannot be deducted from tax-exempt or excluded income. The IRS has a list of deductible expenses, including:
- Tuition, books, supplies, lab fees, and similar items
- Transportation and travel costs related to educational activities
- Other education expenses, such as the cost of research, educational programs, and so on
What exactly falls under items related to education is a matter of discernment. Many times, what a teacher believes to be tax deductible is not recognized by the IRS. For example, the purchase of a video recording of a play that is being taught under the syllabus is likely to be seen as a “legitimate” item, but the purchase of a new television to watch it may not.
Teachers who are pursuing their own education should be aware of the limits imposed by the IRS on the money spent on school supplies. Educators who use tax-favored funds to pay for their own education must subtract the amounts from their total claimed under the educator expenses deduction. That leaves them with lesser money in deductions.
Personal expenses, such as vacation time and personal leave, cannot be deducted. Showing personal expenses as business expenses is tax fraud and is punishable by law. As the self-employed are found to be using false deductions to reduce their tax liability, you need to be careful which items you deduct on your tax return.
The IRS understands that tax preparation can be difficult, and taxpayers regularly complain about the complexity of the U.S. tax code. That is why the IRS has created the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs for specific taxpayers who cannot afford to hire professional tax preparers.