Educator Expense Deduction

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If you are an eligible educator, you can deduct from gross income up to $250 in qualified expenses. You can deduct these expenses even if you do not itemize deductions on Form 1040, Schedule A (PDF). This deduction is for expenses paid or incurred in 2004. Previously, these expenses were deductible only as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit.

You are an eligible educator if, for the tax year, you meet the following requirements:
  • You are a kindergarten through grade 12;
  • Teacher
  • Instructor
  • Counselor
  • Principal, or
  • Aide
  • You may work at least 900 hours a school year in a school that provides elementary or secondary education, as determined under state law.

Qualified expenses are unreimbursed expenses [otherwise deductible trade or business expenses] you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics.

To be deductible, the qualified expenses must be more than the following amounts for the tax year:
  • The interest on qualified U.S. savings bonds that you excluded from income because you paid qualified higher education expenses,
  • Any distribution from a qualified tuition program that you excluded from income, or
  • Any tax-free withdrawals from your Coverdell Education Savings Account.

For additional information regarding personal credits and any alternative minimum tax (AMT), refer to Publication 17, Your Federal Income Tax.


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