Between the start of a new year and the first day of spring, it’s common…
Employees in education and health services make up about 10% of Montgomery’s local economy. More than contributing to municipal financial wellness, our educators play a vital role in raising Montgomery’s children with the knowledge they need to succeed. In this blog, Leadingham Rodgers returns the favor by providing our top 5 tax planning tips for Montgomery’s under-appreciated educators. We hope this tax guide helps you get the most out of your return so you can focus on the work you love!
Top 5 Tax Tips for Teachers
Keep Track of Out-of-Pocket Educator Expenses
A June 2021 study found that 94% of public school teachers use their own money on school supplies for their classrooms: at an average of about $478 per school year. Sound familiar? The good news is that you can deduct many of these expenses, so long as you are an eligible educator and your school hasn’t already reimbursed you.
Eligible educators are K-12 teachers, counselors, principals, or aides who work 900 hours or more in a private or public school. Starting in 2022, teachers may now deduct up to $300 of out-of-pocket classroom expenses on their tax returns. If you haven’t already, make sure to keep track of your receipts and other documentation for any deductions you plan to make.
What can a teacher write off on taxes?
Items eligible for the Educator Expense Deduction include:
- Classroom supplies, such as books, computer equipment, writing materials, and anything else that aids in student learning.
- COVID-19 protective items such as masks, hand sanitizer, hand soap, physical barriers, or any other precautions recommended by the CDC.
Deduct Expenses for Continuing Education
Have you participated in professional development courses, gone back to school, or otherwise spent money on continuing education related to your current job? If so, you may be eligible for the Lifetime Learning Credit.
The Lifetime Learning Credit can help you cover certain expenses related to continuing education, up to $2,000 per tax return. There’s no limit on how many years you can claim the credit, as long as the courses you’re enrolled in are for growing your skills as an educator (not for a personal pursuit or a different career).
You can use the Lifetime Learning Credit to help you cover:
- Books & supplies
- Lab fees
- Transportation and travel fees
See if You Qualify for the Student Loan Interest Deduction
The interest accrued every year on student loans can feel especially overwhelming on a teacher’s salary. Fortunately, there are several options available to teachers who are paying off student debt from college. The options differ depending on whether you have a federal or private student loan, but a Certified Public Accountant can help you navigate the best choice for you.
Two options include:
- Student Loan Interest Deduction: deduct the lesser of $2,500 or the amount of interest you actually paid during the year on your taxes.
- Alabama Math & Science Teacher Education Program (AMSTEP): a federal loan repayment program that benefits qualifying high school teachers in math and science at $2,500 per semester or $5,000 per year.
Factor in Private Tutoring & Other Self-Employment
If you offer paid tutoring services outside of your normal working hours, you’re considered self-employed. While tutoring may not feel like gig work, you can still deduct business expenses on Schedule C. Whether you meet with students over at the Lowder Regional Library or virtually from your own home, any expenses that are ordinary and necessary to providing your services could be eligible for deduction.
The best way to know what you can deduct is to meet with a trusted CPA at Leadingham Rodgers!
Don’t Forget Charitable Donations
In our experience, teachers are some of the most compassionate and giving people in our community. If you’ve made any charitable contributions to your school—or any other cause that’s close to your heart—don’t overlook them when tax season comes around.
Whether you bought library books for your school’s collection, donated backpacks to kids in need, or contributed to a local fundraiser, you can claim a charitable deduction on your tax return. Keep track of any receipts for donations you make throughout the year and tally them up as part of your tax preparation in the new year.
Get Tax Prep Help from a Certified Public Accountant
Our educators are out there building the future—giving of themselves to help spark a sense of curiosity, imagination, and excitement for learning in our youngest community members. We understand that you’re busy enough without all the worries and complications that tax planning and preparation can bring. So why not let the experts at Leadingham Rodgers give you a helping hand?
Our local tax experts are here to help you keep track of expenses and take full advantage of the latest tax laws and legislation. Our CPAs take a proactive approach and will work diligently with an appreciation for the great work our educators do!
Local Tax Services for Teachers in Montgomery, AL
At Leadingham Rodgers, we provide comprehensive tax services for individuals, the self-employed, and businesses alike. We can help you organize your personal financial statements, prepare your taxes, and take every possible step to ease your tax burden during the school year and all year. Call us at (334) 721-2548 or get in touch online to learn more about what our CPAs can do for you!