 Income tax 2021-2022, educator expenses. Get ready to get refunds to the max. Dive in into income tax 2021-2022. Income tax formula focused in on the adjustments to income, which you might hear called the above the line deductions or the schedule one deductions, keeping them distinct in our mind from the standard deductions and the itemized deductions. The adjustments to income are those deductions that are up top a subtotal to get us down to the adjusted gross income. In other words, income minus the adjustments to income, get us to the adjusted gross income, the AGI, which is important because the adjusted gross income is usually the number that's gonna be used or at least started out from in order to calculate phase outs, phase outs on things like deductions and credits as the income level goes up. In other words, those phase outs as income level goes up aren't usually gonna be starting with just the top line, the income line, but rather the adjustments to income. So it's important to keep that in mind and be able to categorize where the different types of deductions that people may possibly get will go and the other implications that might be involved here. So for example, if we had an itemized deduction, the question there of course would be, well, are we able to itemize? Do we have more itemized than the standard deductions? If it's a category that falls into the adjustments to income, then you don't have that same kind of situation with standardized versus itemized deductions, but you also have that added kind of complexity where it could adjust your adjusted gross income or it will and that adjusted gross income might have an impact on like phase outs for things like deductions and credits for example, this is page one of the form 1040. We're focused down here on line 10 adjustments to income from schedule one, line 26. That's why some people might call it a schedule one deduction, although schedule one is a newer form. So people might not be as used to that at this point in time. Used to be called, many people called it above the line deduction, which is something that might have people have lived with for a long time. So they might still call it that. That's why you might hear that term. So here's the schedule one part number two. We're focused now on line 11, the educator expenses at the 250. The total of the schedule one part two will flow in back up here to the 1040 page one and flow into line 10. Now the educator expenses is a deduction that was carved out a long time ago for qualified educators. And it's a specific to a particular industry, which is kind of unusual. It kind of demonstrates the power of the unions, the teacher's unions at that point in time at least. And we got the specific deduction, but it hasn't really been tapered upwards with inflation as much. So the amount of the deduction has been saying somewhat static for some time. So if you're dealing with an educator, then the question is, well, do they qualify for, basically, this is the general rule that you would say if you have a teacher of some time, K through 12 would be the common example. Then you would say, then they probably qualify for this educator expenses deduction. And the general idea would be that if they had expenses that they expended that were personal, that they spent on their particular job, then those are types of expenses that might go towards the educator expenses here. But there's a cap on the 250, which is pretty low. So most of the time, if you have an educator, you could say, okay, they probably hit the cap of spending their personal money at the 200 up to the 250 in order to buy supplies or something like that with their own money. But of course, they wanna be tracking the receipts and so on so they can justify that if there's any questions about the 250 in an audit. But the general rule would be, if you have a single filer and they're a teacher and they qualify as a teacher, then you wanna make sure that they could justify the expenses, but they probably can. So it's almost automatic that you're drilling and say, okay, there's the 250 that you'll have here. If they're married and there's one teacher, it'll be capped at the 250, whatever their expenses are. If there's two teachers, then of course it could be the 500 is just basically the general rule. So that's the, you just wanna have that kind of in your mind if it's a qualified educator, that particular item, which is an industry related item, hasn't changed a lot over the years or going up a lot with inflation. So educator expenses, if you were an eligible educator in 2021, you can deduct online 11 up to 250 of qualified expenses you paid in 2021. If you or your spouse are filing a jointly and both you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than 250 of his or her qualified expenses online 11. An eligible educator is a kidney garden through grade 12. So typical K through 12 teacher, instructor, counselor, principal, or aide who worked in school for at least 900 hours during a year. So it's pretty straightforward normally if they're a normal like a teacher, but you can see you can kinda get into the weeds a little bit with other people that could be involved instructor, counselor, principal or aide. So educator expenses, qualified expenses include ordinary and necessary expenses paid. So that's gonna be similar to what you would expect from like a schedule C type of business. So in other words, we have an income tax here. If you had a schedule C type of business, you would expect the types of things that you can expend. That would be a sole proprietorship would be those which you used in order to generate the revenue because you had to expend those to generate the revenue. So they should tax you on the net income, not the gross income. If you're a W2 employee, they don't let you do that because the idea would be that the employer is the one that's paying for everything that you basically need. And they're gonna be deducting the expenses and you're just working with the tools that they basically provide you. Obviously there are many jobs where you might have your own tools to some degree that you're applying and you would like to have your own deductions, but that's usually the distinction of being an employee versus an employer or a sole proprietorship, at least with regards to the tax code. So they kinda carved out for the educators, the idea, well, if you spend some money of your own on educator stuff, then we're gonna give you basically this deduction specific to your industry. Obviously any industry probably has the same thing where you spend your personal money on business related stuff to improve your job if you like your job, right? If you're into it, you would think of course teachers generally typically like their job and are willing possibly to spend more money over and above what the school provides at oftentimes. So that's the general idea. So then in connection with book supplies, equipment, including computer equipment, software and services and other materials used in the classroom, educator expenses and 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. Qualified expenses include amounts paid or incurred in 2021 for personal protective equipment, disinfected and other supplies used for the prevention of the spread of coronavirus. This was their big move to, during the coronavirus they added, they actually put out some stuff saying that they made this big move that they included the fact that people could include the disinfective and whatnot during the coronavirus thing. But it's kind of, the reason it kind of makes me laugh is because come on, the educators are already most likely spending over $250. It's not like they needed, oh, well now I could finally deduct that last $5 because I spent money on the teaching on the disinfective, which is now on any case. Educator expenses, qualified expenses don't include expenses for homeschooling or for non-athletic supplies for courses in health or physical education. Qualified expenses don't include expenses for homeschooling or non-athletic supplies for courses in health or physical education. I repeated that. Non-taxable qualified tuition program earning or distributions, any non-taxable distribution of Coverdale Education Savings Account earnings, any reimbursement you received for these expenses that weren't reported to you in box one of your form W-2.