 Internal Revenue Service IRS tax news, new school year reminder to educators, maximum educator expense deduction rises to $300 in 2022. Holy moly, surely that'll keep up with inflation? Not, but first an attempt at a joke. Poor President Biden can't even get a word in edgewise. Oh, maybe he couldn't get a word in edgewise. So the best way to get something done, if you hold near and dear to you, that you, what's that Phil? No, nobody's cutting him off or anything. And you're going to be cutting him off completely? Like to be able to, anyway. He's up there at the podium all alone, the audience patiently waiting. We're ready to get a lot done. And the poor guys still can't get a word in edgewise. Okay, um, hang on, uh, sorry, oh, same mate, Ms. Kim. You know Phil, I wanted a fairy tale ending. It's like a fairy tale. Why? Because I heard they were more lucky than a rabbit's foot. Be lucky. However, it seems most fairies don't have a tale. My tale! Where's my tale? Making it difficult to acquire one. I know just where you can get one. IR2022-148 August 10th, 2022 Washington, as the new school year begins, the Internal Revenue Service reminds teachers and other educators that they'll be able to deduct up to $300 out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year. Now, this is an interesting deduction if you are a teacher, if you have teachers' clients or teachers in your family or educators in your family as I do, then you're probably familiar with this deduction. It was 250 before. The thing that's interesting about it is that it is a deduction geared towards a specific industry, which is kind of unusual. And at the time it was put in place a long time ago when it was initially put in place, it was a testament to the power of the teachers' union in essence because that 250 was actually significant at that point. But then it wasn't increased for a long period of time until now, so it's still a fairly less impressive dollar amount of the deduction. But the general idea from a practical standpoint would be note that usually if you're a sole proprietorship, you're not a W-2 employee, but a sole proprietor, then you get to deduct the expenses that you have, although you have the burden of having to pay the self-employment tax basically double the employee and the employer share. So you've got some pros and cons on that side. And then if you're a W-2 employee, the idea is that the employer is going to be taking care of most of your expenses. Therefore, you don't get to deduct them in that case. But then they put the special kind of rule for teachers, which was 250. They raised it up to an astounding $300 now that you could deduct the $300 if you're a qualified educator. And so any time you're doing a tax return, in essence, for a qualified educator, you want to basically keep that in mind because it's likely that they will be able to take that deduction because it's a fairly small dollar amount. In other words, if they're spending money on equipment that would qualify for this deduction for their job, then being special in the teacher area because the teacher's union pushed us through way back when they finally increased the dollar amount, you could deduct the $300 basically above the line. So you always want to keep that in mind. In other words, it's not a standard deduction. It's a deduction that you could take even if you're not itemizing. Okay, so this is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. So it was in 2002 that the might of the teacher's union went in and had this special deduction just for teachers, which had the 250, which was pretty significant dollar amount at that point. But now what do we have? 2022 and they haven't increased it and so now they're increasing it a little bit. So it looks a little bit more impressive. So for tax years 2002 through 2021, the limit was $250 per year. The limit will rise in $50 increments in future years based on inflation adjustments. So for 2022, an eligible educator can deduct up to $300 of qualified expenses. If they're married and file a joint return with another eligible educator, the limit rises to $600. So that it's like $300 per person. If there's two people then you would have the $600 because they're both educators. But in this situation, not more than 300 for each spouse. So who qualifies educators can claim this deduction even if they take the standard deduction. So even if you're not itemizing in other words because it's an above the line or possibly you can call it a schedule one deduction. Eligible educators include anyone who is kindergarten through 12th grade, 12th teacher, instructor, counselor, principal or aid in a school for at least 900 hours during the school year. Both public and private school educators qualify. What's deductible? Educators can deduct the unreimbursed costs of books, supplies, other materials used in the classroom. So I'm sure I know the educators that I've in my family probably spent a lot more than that amount on stuff. As do many people in other fields, by the way, it's not just educators that spend money on stuff that's work related. But educators clearly oftentimes spend money on stuff for their education and whatnot. And so those would be the kind of things that you would think would be deductible. In other words, the kind of things that you would think would be deductible if you were a sole proprietorship in general, the things that are going towards your job. So equipment, including computer equipment, software and services, COVID-19, protective items to stop the spread of the disease in the classrooms. So if you bought, they added that stuff. It was an astounding ad that they made. They were touting the Biden administration, touting that they included the COVID stuff as if nobody was already spending over 250 before they can include the hand sanitizer. But in any case, this includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizers, disposable gloves, tape, paint, or chalk to guide social distancing. Physical, we're not using the chalk on the chalkboard anymore because we don't we don't have chalkboards. You use it to draw lines on the ground for social distancing apparently. Physical barriers such as clear plexiglass, air purifiers, and other items recommended by the Centers for Disease Control and Prevention. Man, schools are a crazy, crazy alien place to me these days. Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credits for Detail C Publication 970 tax benefits for education. So if you're taking higher education and you can get the tax credits for them, that would probably be more beneficial than a $300 deduction because the credit would be bigger and probably bigger in dollar amount as well. In any case, qualified expenses don't include the cost of homeschooling for the non-athletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancel checks, and other documentation. So clearly, you'd like to keep the information. Again, I don't think there's going to be a whole lot of audits based on whether or not an educator has cleared that threshold $300 because it's fairly low threshold to kind of clear, I would think. But clearly, you still in the event of an audit would want to make sure that you have the documentation to justify the deduction. So keep the receipts, have your bookkeeping records, and so on. So reminder for 2021 tax returns being filed now, deduction limit is $250. For those who received a tax filing extension or still need to file 2021 tax returns, the IRS reminds any educator still working on their 2021 return that the deduction limit is $250. Now, this is something that software can help out with as well. So just, you know, if you're using, I think you still have free access to some of the free software, that free file, if you go to IRS free file that you could find, which are given by third proprietary or third party proprietary software providers. And if you put in something over, you know, $250 or $300 in 2022, it'll cap it and limit it for you. So you do have to make sure that when you're entering the data, you recognize that someone is an educator and that's what should trigger it in your mind. Even that, you might be able to, the software could help you with because if you put that in as their occupation, it might tell you, hey, they might get this deduction. So use the software to help you with these caps and these limitations in practice. So if they are married and file a joint return with another eligible educator, the limit rises $500. But in this situation, not more than $250 for each spouse. So if you have two educators back in 2021, before that huge increase of $50, then you'd have $500, $250 plus $250 for the two educators. File electronically when ready. Tax filing software uses a question and answer format that makes doing taxes easier, whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer. The IRS urges everyone to file electronically and choose direct deposit for refunds. For details, visit electronic filing options for individuals. In addition, the IRS urges anyone who owes taxes to choose the speed and convenience of paying electronically, such as with IRS direct pay, a free service available online on irs.gov, irs.gov. For victory, for information about this and other payment options, visit pay online. There's a link to that here. Taxpayers who request more time to file an accurate return have until October 17th, 2022. Those who have weight they need to file have what they need to file. However, should file as soon as possible to avoid delays in processing their return. Taxpayers are urged to file electronically when they are ready and avoid the last minute rush to file at the deadline. So there's links to this stuff here. If you wanna check out some of those links and there'll be a link to this in the description.