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September 2002

New Tax Break for Teachers

As you know, elementary and secondary school teachers and personnel often find themselves paying school-related expenses out of their own pockets. While this unfortunate situation may not change anytime soon, a 2002 tax law change provides a bit of relief. You can now deduct up to $250 of un-reimbursed expenditures for books; most supplies; computer hardware, software, and services; other equipment; and supplementary materials used in the classroom. This is something to keep in mind as the beginning of the next school year rapidly approaches.

The new deduction is "above-the-line." So you need not itemize to claim the write-off. It is available for any qualifying expenses paid in 2002 and 2003 (up to the $250 per year limit).

You are generally eligible if you are a Kindergarten though grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during school periods falling within 2002. For 2003, the same 900-hour rule will apply. If you incur school-related expenses in excess of the $250 limit, you may be entitled to an additional write-off if you itemize.

The IRS suggests that you set up a folder or envelope to keep receipts for your un-reimbursed school-related expenses. On each receipt, note the date, amount, and purpose of the school-related expense item. That way, you'll have all the necessary documentation on hand at tax return time.

If you have questions about this new deduction or about any other tax matters, please don't hesitate to call.
Very truly yours,

CPA Advisory Group, Inc.

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