Contact: Margaret Mitchell
301-212-9608 l fax 301-990-1611
www.naea.org
Contact: Margaret Mitchell
Telephone: 301-212-9608
E-mail: mmitchell@naeahq.org
New Tax Break for Teachers
Gaithersburg, MD—June 18, 2002—School is out; but planning for the new school year in September 2002 is more important than ever if you are an eligible educator.
Under the Job Creation and Worker Assistance Act of 2002, a new deduction—beginning for tax year 2002—of up to $250 can now be deducted from educators' adjusted gross income even if they do not itemize. The new law, advises Gerry Voss, EA, is most beneficial because under the old law, education expenses were a miscellaneous itemized deduction subject to the 2% limit of adjusted gross income. Under the new law, the first $250 can be deducted directly from adjusted gross income and the balance of expenses can still be deducted as a miscellaneous itemized deduction subject to the 2% limit.
You are considered an educator under the Job Creation and Workers Assistance Act of 2002 if:
• You are a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide;
• You work at least 900 hours during the school year in a school that provides elementary or
secondary education, as determined under state law.
Qualified expenses are un-reimbursed expenses paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that are used in the classroom. For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics.
To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the tax year:
• The interest on qualified U.S. savings bonds that you excluded from income because you paid qualified higher education expenses;
• Any distribution from a qualified tuition program that you excluded from income; or
• Any tax-free withdrawals from your Coverdell education savings account.
According to Voss, “now is a good time to start your recordkeeping for the new school year and put together a folder noting the date, amount, and purpose of each expense. This will come in handy at tax time.”
Contact an Enrolled Agent for advice on how you can prepare for this new deduction. Enrolled Agents are federally authorized tax practitioners who have technical expertise in the field of taxation and are empowered to represent taxpayers before all administrative levels of the IRS for audits, collections, and appeals. EAs provide tax preparation, tax advice, and tax planning services in addition to helping taxpayers resolve problems with the IRS. To find an Enrolled Agent in your area, call 1-800-424-4339 or visit the National Association of Enrolled Agents Web site at www.naea.org .
The National Association of Enrolled Agents is a non-profit membership organization dedicated to representing, promoting and enhancing the Enrolled Agent profession. Enrolled Agents are unique as the only group of tax practitioner specialists required to maintain their credentials through continuing education reported directly to the Internal Revenue Service. NAEA provides a national, toll-free, 24-hour EA Referral Service hotline, (800) 424-4339, for consumers seeking the services of an Enrolled Agent. NAEA's Web site includes tax news and information, answers to frequently asked tax questions, electronic bulletin boards and an online referral listing for the public.