Income Tax Help for Teachers (I)

by R. L. Fielding

From purchasing classroom supplies to paying for grad school tuition, a career in teaching can leave a person feeling a bit light in the wallet. Fortunately, there are a number of tax breaks available to educators. If you're a teacher looking for income tax help, here's what you need to know:

Reporting Income from Tutoring
The educational institution employing you should provide you with a Form W-2, Wage and Tax Statement, which reports your income from wages, prizes or awards. Payments that you receive for providing services as a tutor, in addition to your regular job, may be considered income from self-employment and are reportable on Schedule C, Profit or Loss from Business. Examples include tutoring high school students and college students after school or providing music lessons to any individual (voice, piano, drums, guitar, etc) on the weekends.

If you are self-employed and your net earnings are $400 or more, you must pay self-employment tax on the income you report on Schedule C. In addition, you may need to make estimated payments to cover the amount of self-employment tax or income tax associated with the income you report on Schedule C.

Deducting Continuing Education Expenses
You may be able to reduce your taxes by deducting expenses for tuition incurred in pursuing graduate school or other additional education. If the education is part of your state school board's certification renewal process, it may be deductible. However, if the education is needed to meet the minimum educational requirements to qualify you for a particular position, or if the education will qualify you for a new trade or business, it is not deductible. Changing from an elementary school teacher to a secondary school teacher or changing the subject you teach, from biology to art, for example, is not a change to a new business. Classroom teachers that become guidance counselors or school administrators are also not considered to have changed their trade or business.

Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. This is true even if you must get additional education to be certified in another state. Any additional education you need is qualifying work-related education. You may still be able to obtain a benefit from educational expenses that do not qualify for a work-related education deduction if you qualify for the Hope Credit, the Lifetime Learning Credit, the student loan interest deduction, or the tuition and fees deduction.

Deducting the Cost of Supplies
If you are a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year, you are allowed an above-the-line deduction of up to $250 of qualified expenses you paid during the tax year. This deduction directly reduces your income, and you do not need to itemize deductions to obtain this benefit.

While supplies used for home schooling or non-athletic supplies used for courses in health or physical education do not qualify, you may be able to deduct the out-of-pocket cost for supplies that exceed the $250 limit if you itemize your deductions. You should keep receipts to substantiate all expenses.

About the Author
R.L. Fielding has been a freelance writer for 10 years, offering her expertise and skills to a variety of major organizations in the education, pharmaceuticals and healthcare, financial services, and manufacturing industries. She lives in New Jersey with her dog and two cats and enjoys rock climbing and ornamental gardening.