IRS Audit, IRS Problems

Teacher! Teacher!

September 13, 2012 - IRS Audit, IRS Problems

    Did you know that the IRS has made a special provision for teachers of Kindergarten though Grades 12? This special attention is not a bad thing. This is a good thing.         The 3 R’s First, thank you for helping our children grow into our future leaders. I was, and still am today, a great student. Thanks to my parents and my teachers, I love to read. Reading opens the world to us. ‘Riting allows us to communicate and allows me to share with you on this blog. And the third “R”, ‘Rithmetic, allows me to add up all the numbers and be successful in my chosen profession. It is my specialized knowledge as a former IRS tax auditor, a former IRS “insider”, that benefits YOU in knowing how to protect yourself from, how to prevent, what can be for some, the dreaded INCOME TAX AUDIT. The INTERNAL REVENUE SERVICE does not make the laws. They are like the TAX POLICE. They enforce the laws that our elected Congress makes.   The Special Provision So what is this special provision I brought up in my opening sentence? If you are a teacher, an educator, an instructor, a teacher’s aide, a counselor or even a principal, of grades K through 12, you can deduct $250 on the front of your 1040 tax return even without itemizing any other deductions!    There Are Some Requirements You DO have to spend at least 900 hours during the school year as an educator. The typical school year is 9 months long. 900 hours divided by 9 months is only 100 hours a month. Does a principal spend that much time in front of the classroom? I guess that depends on the school. And the requirement of grades K-12 means not preschool and not after high school. So college, university and trade school teachers do not qualify for this special treatment. This $250 “above the line” deduction is limited to amounts paid for expenses like books, supplies, computer software and equipment, and other equipment and materials used in the classroom. “Above the line” means this $250 is subtracted from your “total income” in figuring your “adjusted gross income.” Your tax preparer knows what all this tax lingo means. You just need to know you don’t have to itemize your deductions. You can take the Standard Deduction, AND on top of that, also claim this additional $250. If you and your spouse are both educators, you can each claim a $250 “above the line” deduction. So if you each spent $250, that would be $500 “off the top.” Be careful. This special deduction is “up to”, meaning “not more than” $250. If Jack spent $300 and Jill spent $200, your total spent as a married couple would be $500, but your “off the top” or “above the line” deduction is limited to $250 for Jack and $200 for Jill or $450 total in this example. Does Jack get to deduct that additional $50? Yes, if they claim ITEMIZED DEDUCTIONS, using Schedule A. If you own your home and pay interest on your mortgage, chances are you can itemize your deductions. Click Here to read my blog post on itemized deductions and the proper forms to use. Why do teachers get this special deduction? Many, if not most, schools have a limited budget for their teachers’ supplies and classroom expenses. Teachers want their students to have a good learning experience. Every student deserves the best education possible. And teachers are known to buy things that the school cannot supply. Three of the favorite words used by the IRS are “necessary, ordinary and reasonable.” Our government does not want to fund expenses that are considered “lavish or extraordinary.”   The 4th R The fourth “R” that I feel is SO important stands for RECEIPTS! Record keeping is REQUIRED to protect your deduction. Of course I don’t care if you don’t keep your receipts. And IRS doesn’t care if you don’t keep your receipts. But I will guarantee you this. If you don’t keep your receipts, you will lose your tax-saving deductions! Only YOU know what you spent your money on for your classroom. Are you an art teacher that needed to supply special materials for a classroom project? Are you a geography teacher that wanted a topographical globe or map for your classroom? Do you put gold stars on your young student’s good work? Whether you pay by cash, check or credit card. Keep the receipts. Make notations on the receipt to help you remember what you bought and why you bought it. Deduct the expense in the year of your purchase.   Your Report Card I give you an “A”. I give you a gold star for helping our youth and for allowing me to help you pay your lowest legal tax.   Nellie Williams, EA Bullet Proof Your Taxes  

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