Thank goodness for teachers! If you are a teacher, you might have your thoughts more on what you will do during your well-deserved vacation than on taxes, but saving on taxes is really a year-round project. So before you close the books and lock your classroom door for the summer, here are five things you should know.
- Keep receipts for classroom materials you buy. The classroom budget is never enough, so this summer, as you begin to acquire supplies you’ll need for the upcoming school year, keep track of the receipts for things such as classroom supplies, materials, books, computer equipment, software, other equipment, and supplementary materials that you pay from your own pocket since Congress permanently passed the Educator Expense Deduction. The deduction directly reduces your taxable income up to $250 for money you spent for supplies and materials you purchased to keep your students on top of their “A” game. This tax benefit is going to allow you to keep more money in your pocket.
- Don’t forget continuing education expenses. If you take college or vocational classes, remeber these: American Opportunity Credit, the Lifetime Learning Credit, and the Tuition and Fees Deduction. The Lifetime Learning Credit allows you to take a tax credit of 20% of tuition and fees. The tax credit is worth up to $2,000 per tax return, and you don’t have to itemize your deductions to claim this credit. You are not eligible to claim any expenses that were reimbursed by your employer.
- Claim a home office deduction if you qualify. If you tutor children in your home or do classes over the internet, those activities might qualify you for the tax deduction. If you receive a 1099-Misc for tutoring and a portion of your home is used regularly and exclusively for activities in connection with your teaching, you may be able to take a home office deduction.
- Donate supplies for an additional deduction. *Although some tax deductions for teachers have gone away for tax year 2018 under the new tax reform law, there is another tax deduction you may not be thinking about that can boost your tax deduction. If you overspent on some supplies that you won’t be able to use, you can help those in need and get some of your money back by donating the supplies to a charitable organization and garnering a tax deduction.
- Take a tax deduction for student loan interest. After finishing up all of your classes to get your teaching credentials you may have racked up a big student loan bill, but don’t worry. You can take the student loan interest deduction worth up to $2,500 of your student loan interest paid during the year to lower your tax bill.
*If you haven’t filed your 2017 taxes, you still may be able to deduct mileage you drove to coach a sport or lead after-school activities away from your school, do home schooling or regularly call on students, or drive from school to school. You may also be able to deduct union dues, professional books related to your teaching activities, or have any other expenses that are directly related to teaching as an unreimbursed employee expenses on your 2017 taxes. These tax deductions will are no longer available for 2018 tax preparation.
Don’t worry about knowing these tax laws. TurboTax will ask you simple questions and give you the tax deductions and credits you’re eligible for based on your answers.