 Income tax 2023-2024, educator expenses. Get ready and some coffee because we're laying down the facts about income tax preparation 2023-2024. Most of this information can be found in the Instructions for Schedule 1 section of the Form 1040 Instructions Tax Year 2023 which you can find on the IRS website at irs.gov, irs.gov, looking at the income tax formula. We're focused online to Adjustment to Income which you might hear called above the line deduction or possibly Schedule 1 deductions noting that the first half of the income tax formula is basically a funny income statement. Most income statements having income minus expenses resulting in net income. Here we have income minus various deductions resulting in taxable income. The deductions for taxes are good and therefore we're constantly looking for things that could possibly increase the amount of deductions. The major categories of deductions being the adjustments to income which you might also see as the above the line deductions and then what I would call the below the line deductions which are the greater of standard deduction or itemized deductions. The above the line deductions are usually less common less well-known than some of the categories of itemized and standard deductions but are quite important even to lower income taxpayers because you could still get a benefit from them as opposed to some items which are itemized deductions where you possibly would only get a benefit if your itemized deductions are greater than the standard deduction. Alright looking at the first page of the Form 1040 we're looking down here on line number 10. This is going to be adjustments to income from schedule one line 26. This is going to be the schedule one we're looking at part number two the adjustments to income meaning reductions of income or in essence expenses and this is going to be line 11 the educator expenses. Now this one's been there for some time but you probably wouldn't really know about it unless you are an qualified educator because it's one of those weird line items in the tax code where there's been lobbying for a particular kind of industry so you get a benefit. First a word from our sponsor. Yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways like our crunchy numbers as my cardio product line. Now I'm not saying that subscribing to this channel crunching numbers with us will make you thin fit and healthy or anything. However it does seem like it works for her just saying so subscribe hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com that's really restricted to a one type of group of people or one industry. Okay and that might be a testament say to the teachers unions although this was put in place a long time ago so so you can see how strong are the current teachers unions based on how much that credit might change with inflation over the years but in any case adjustments to income line 11 you've got the educator expenses. So if you were an eligible educator in 2023 you can deduct online 11 up to $300 of the qualified expenses you paid in 2023. So if you and your spouse are filing jointly and both of you were eligible educators the maximum deduction is $600. So in other words if you're a tax preparer and someone says that they are an educator then the next question is going to be of course are you an educator that qualifies as an eligible educator so that we can possibly take advantage of the $300 deduction that's and above the line deduction which you might be able to get just based on the industry that you happen to be in as an above the line deduction. However neither spouse can deduct more than 300 of their qualified expenses online 11. Now we have this question of what is a qualified expense that we have to take into consideration but note that the dollar amounts are pretty low like $300 so most people no matter what job they do if they're passionate about their job they might be spending more most likely will be spending more than $300 on stuff that would basically be expendable something that you can write off if you had a sole proprietor schedule C type of business. So just a quick recap of the dynamics here between a sole proprietor business and a W-2 business. If you had a sole proprietor business then you have your own business reporting on a schedule C. In that case you typically have to pay for your own tools and what not your own supplies and those are going to be deductible the schedule C therefore in essence an income statement the expenses on the schedule C basically being business deductions on the schedule C. For W-2 employees the assumption is the employer is responsible for providing all the tools that you that you need to facilitate your job and therefore the IRS typically doesn't allow normal kind of business expenses that you would expend in order to help you to generate revenue if you're a W-2 employee because of that assumption the employer should be providing them but obviously most of the time if we're passionate about what we are doing we're probably buying our own stuff as well if we think it would be useful and teachers clearly fall into that category and the $300 limit therefore for an entire year you would think it's you know fairly low I think a lot of teachers probably are gonna spend you know that much money and and therefore on eligible items but of course you would want to keep track of the those spendings to make sure that in the event of an audit you can justify those expenditures although again you would think that an audit would likely not be triggered by a $300 but you never know you know I mean maybe you're one of those radical type of instructors that tried to convince the drag queen to put more than just a thong on before the mandatory drag queen story hour in which case the iris may well come after you as well as the FBI so you want to keep your record straight make sure you have the record straight you might not be able to keep everything straight but the records should be able to keep those straight in any case an eligible educator is a kidney garden through 12 teacher instructor counselor principal or aid who worked in a school for at least 900 hours during a school year so if you have someone that is an educator the first thing that would come up is a teacher but there might be some more expansive qualifications so once again an eligible educator is a kidney garden through 12 teacher instructor counselor principal or aid who worked in a school for at least 900 hours during a school year so once we've determined they're a qualified educator the next question do they have qualified expenses now again usually because the dollar limit is pretty low you would think they might clear that threshold but you want to make sure that they have the information in case again iris the FBI comes after more what not you got the documentation so qualified expenses include ordinary and necessary expenses paid so for professional development courses you have taken related to the curriculum you teach or the students you teach so in other words when we think about the types of expenses that are normally possibly deductible with regards to a income tax system you would think the expenses that were ordinary and necessary are the ones that would be deductible that's kind of the rule typically when you look at the business side of things if you were a business schedule see those expenses that you had to expend in order to help you to generate revenue you would think be deductible so that the tax applies to the net income not to the gross income so then the question is what types of expenses are ordinary and necessary in this case although you don't have a schedule see business but rather are a teacher but they're allowing you to take those similar kind of deductions which you are providing rather than them assuming the IRS the government assuming that the employer is providing them so in connection with books equipment including computer equipment software and services and other materials used in the classroom so in ordinary expenses is one that is common and acceptable in your educational field so that that would be you know if you're trying to test as to whether an expense would qualify it's ordinary and necessary in the field a necessary expense is one that is helpful and appropriate for your profession as an educator and expense doesn't have to be required to be considered necessary so in other words is if you didn't have the thing would that mean that you couldn't do your job you have to quit being a teacher that doesn't make it necessary that's not what we typically mean by ordinary and and necessary so once again an ordinary expense is one that is common and accepted in your educational field a necessary expense is one that is helpful and appropriate for your profession as an educator and expense doesn't have to be required to be considered necessary tip qualified expenses include amounts paid or incurred in 2023 for personal protective equipment disinfectant and other supplies used for the prevention of the spread of coronavirus this was kind of a funny development not that coronavirus was funny or anything but when the the administration basically came out the government came out and said look at what we did we include and we included the ability to put like hand sanitizers as something that would qualify for the educator expenses as though that did anything because I mean I again I would think most educators basically are paying more than the threshold already you know it doesn't seem like a big win to me that I mean it would be a win to educators if they increase the level of spending like from 300 to a thousand or something like that which I'm not really arguing for I'm just saying it was it was kind of funny to me that they were bragging about that because I don't think it'll have actually an impact anybody but there it is qualified expenses don't include expenses for homeschooling or for non athletic supplies for courses and health or physical education so you must reduce your qualified expenses by the following amounts excludable us series ee and saving bond interest from form eight eight one five non taxable qualified tuition program earnings or distributions any non taxable distributions of coverdale education savings account earnings any reimbursement you receive for these expenses that weren't reported to you in box one of your form W2 so obviously you know if you've got some form of reimbursement for the expensive expenses or some type of tax benefit already then you shouldn't get a a deduction for for them so if you paid for it and then you got reimbursed for them by your by the school or something like that but again I don't think those usually are going to apply to most people because the threshold is fairly low at three hundred dollars and and a lot of people might have more than enough expenses to to hit that threshold so so that means as a tax preparer you know you're going to hear educator oh they qualify as a teacher well it's almost a default that you would think that they're going to pick up the the the three hundred dollar maximum although again you would still want to of course make sure that they have the supporting documentation so for more details you can to use tax topic 458 or publication 529 which you can find on the irs website irs.gov irs.gov