The Internal Revenue Service is reminding teachers and other educators to save all receipts and paperwork for out-of-pocket expenses incurred during the school year. Parents are reminded that tuition and fees may be deductible for qualified higher-education expenses.
The Tax Relief and Health Care Act, enacted in December 2006, reinstated both deductions through the end of this year.
As for teacher-education expenses?
This deduction is worth up to $250 for qualified expenses and is "above the line," meaning taxpayers will be eligible to claim it whether they itemize their deductions or not. Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in public or private elementary or secondary schools.
Qualified expenses are unreimbursed expenses paid or incurred for books, supplies, computer equipment (including related software and services) or other supplementary materials used in the classroom.
Teachers and educators deducted more than $877 million of these out-of-pocket classroom expenses in 2005.
The tuition and fees deduction is also "above the line"; this is worth up to $4,000 for taxpayers who pay for a higher education at an eligible institution. Those who pay qualified tuition and related expenses for themselves, a spouse or a dependent may be able to claim it, provided they meet other qualifications.
The deduction cannot be claimed if an education credit is claimed for the same student, or if the taxpayer uses the "Married Filing Separate" filing status. Almost $11 billion was claimed in 2005.
For forms and publications, call 1-800-829-3676.