Tuesday, January 11, 2011

Tax Changes for Teachers

Q: I have been reading about the recent tax changes President Obama just approved, one being that teachers can take a $250 deduction on their taxes for items purchased for school with their own money. Does this apply to those who home-school?

—C.B., Garner, N.C.

A: You are generally correct about the new tax changes. But the short answer to your question is: No. It doesn't apply to home-school teachers, according to an Internal Revenue Service spokesman.

Here is some background: President Obama recently signed legislation restoring a popular deduction that had expired at the end of 2009. It provided a small benefit to millions of elementary- and secondary-school teachers and other educators who had paid for school supplies out of their own pockets.

The deduction is for as much as $250 a year -- or as much as $500 if you're married, file a joint return with your spouse and both spouses qualify (but not more than $250 apiece).

The deduction covers items such as books, supplies and computer equipment, including related software and services. This is what's known as an "above-the-line" deduction since it appears on a line on your federal income-tax return above the line for adjusted gross income.

That's important because it is available whether or not you itemize your deductions on Schedule A. (Nearly two-thirds of all taxpayers each year don't itemize their deductions.)

You are an "eligible educator" if you've worked at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. That means any school that provides elementary or secondary education, "as determined under state law," according to a publication by Congress's Joint Committee on Taxation.

The new law restored the educators' expense deduction from 2009 and extends it through 2011. That means the deduction is available for the 2010 and 2011 tax years.

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