Tax breaks for teachers

Three tax pros share lesson plans for cutting teachers’ tax bills.

The flood of education-related tax advice that seems to crest during back-to-school season often centers on students or their parents. But teachers can score a few tax breaks, too — if they do their homework.

1 Educator Expense Deduction What it is: A $250 deduction to help recoup out-of-pocket costs for outfitting a classroom, getting training or buying teaching materials. How it works: K-12 teachers can take this deduction regardless of whether they itemize on their taxes or take the standard deduction. Counselors, principals or aides may also be able to take the educator expenses deduction if they worked at least 900 hours in a qualifying school during the school year, says Tracie Miller-Nobles, a certified public accountant and member of the American Institute of CPAs’ National CPA Financial Literacy Commission.

2 Charitable Contribution deductions What It Is: A tax deduction for donations to charitable organizations, including nonprofit schools. How it works: If the educator expense deduction doesn't cover everything a teacher has spent out of pocket for items that end up belonging to the school, teachers might be able to deduct the rest as a charitable contribution, says Lauri Pitcher, a CPA and president and CEO of accounting firm Lucia & Co. in San Bernardino, California. Taking this deduction will require good record-keeping; it may also require working with the principal or other school administrators to get receipts that will substantiate the donations, she says.

3 Lifetime Learning Credit What it is: A tax credit equal to 20% of the first $10,000 spent on tuition and fees. The maximum credit is $2,000 per return. How it works: The Lifetime Learning credit is available to graduate students, which means it can be a great tax break for teachers who are pursuing a master's degree, says Melinda Nelson, a CPA and partner at accounting firm Henry + Horne in Tempe, Arizona. Teachers who are simply taking classes to improve job skills can also qualify. Pursuing a degree isn't required.

4 Free File What it is: For do-it-yourself taxpayers, Free File is an IRS program that provides free brand-name tax software to people whose adjusted gross income is below a certain threshold. How it works: You probably qualify for Free File if your adjusted gross income is under the limit (currently $66,000). Note that even if the software for your federal tax return is free, there might be a fee for your state tax return.