Educator Expense Deduction

What Is the Educator Expense Deduction?

The educator expense deduction is an adjusted gross income (AGI) deduction for teachers and other education professionals for up to $250 in out-of-pocket expenses. This deduction allows eligible educators to deduct unreimbursed expenses related to education. Qualified expenses include books and supplies used in the classroom, as well as any technology or software necessary to teach students.

For the 2020 tax year, educators may also deduct unreimbursed expenses that they have incurred for COVID-19 protective items since March 12, 2020, according to new IRS guidance.

It used to be that schools supplied students with everything they needed to gain an education from kindergarten through grade 12, including costs to compete in athletics or participate in after-school groups.

That’s no longer the case. Cuts in educational funding now make it necessary for students and teachers to pitch in on everything from tissues for the classroom to gas money for sports team travel.

How the Educator Expense Deduction Works

Any teacher, instructor, counselor, principal, or aide who worked at least 900 hours during the school year in a kindergarten through grade 12 classroom can qualify for the educator expense deduction, for up to $250 in out-of-pocket expenses purchased on an annual basis. Educators must work in a school that provides elementary or secondary education, as defined by the laws of their states. The school you work in must, therefore, be certified by your state, or you can’t qualify for the deduction. Educators at public, private, and religious schools can all qualify to take this tax deduction.

Deductions related to homeschooling are not allowed. Educators who work in pre-school environments—or in undergraduate or graduate school settings—also cannot take this deduction.

Originally part of the American Taxpayer Relief Act, the deduction is indexed to inflation, so it doesn’t lose its value over time. Even better is that this deduction comes “right off the top” of your gross income and is not part of itemization. Considering recent changes to the tax structure that nearly doubled the standard deduction for many people, thus eliminating the need to itemize, this is an important issue.

Qualified educator expenses that can be deducted include those for:

• Participation in professional development courses
• Supplies, books, and supplementary materials used in the classroom
• The cost of computer equipment (including software and services) used in the classroom to teach students
• Health courses and physical education, provided that the expenses are for athletic supplies

However, if you used a Coverdell education savings account (ESA), or other tax-advantaged funding sources, to pay for your professional development courses, you must subtract that amount from your deduction. If you didn’t report income from Series EE or I savings bonds because you used the money for education expenses, you can only deduct expenses that are in excess of this amount.

Limits to the Educator Expense Deduction

If your expenses exceed $250, you used to be able to treat the amount over as unreimbursed employee expenses—if the money spent exceeded 2% of your AGI. That deduction went away with the Tax Cuts and Jobs Act of 2017. However, two educators who are married and filing jointly can each deduct up to $250 in educator expenses, for a total of $500 between them.

Note that you can’t both claim the same expense as an educator deduction, as the IRS does not allow the deduction of the same expense twice. You also can’t deduct any out-of-pocket expenses for which you were reimbursed by your school. You also can’t deduct any expenses paid for by grants or similar funding sources.