Education - Teacher Expenses

[Foxy-Lady]

I have a number of teachers who worked from home using various computer apps for teaching their students remotely.  They were on their computer and internet 10 to 12 hours per day.  Any apps the school paid. They also used their cell phone for school business.  I believe these are legitimate expenses.  What is your opinion?

[Camp1040]

Misc itemized deductions, employee business expenses are no longer deductible on the federal return, may be deductible on the state return.

That info should have been reviewed in CE concerning the TCJA.

[abctax55]

They are legit, they just aren't deductible and haven't been at the Federal level since TCJA passed.  Some states still allow employee business expenses as a deduction.

The max allowed to teachers is still that whopping $ 250 above the line.  The IRS *did* just liberalize  what could be included in those expenses (think PPE costs), but the limit is the same.

[rbynaker]

I think it's a stretch.  IMO Congress would need to update the language in section 62(a)(2)(D).  It currently reads (emphasis mine):

"used by the eligible educator in the classroom."

Rick

[sjrcpa]

Might the classroom now be the teacher's living room, den, guest room?

[abctax55]

I'd be inclined to take it, but I'd delve into the nitty gritty a bit more IF it amounted to a major deduction.  And without it being a deduction for Federal, the impact is minimal for my clients.

Plus, I'm not sure most/some/all teachers were teaching from home 'round here.  I think they were at school but the students weren't.   None of my teacher clients have submitted info yet. 

[rbynaker]

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Might the classroom now be the teacher's living room, den, guest room?

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Not in my opinion.  Congress had the opportunity to use language such as "in performance of their duties as educators" but they specifically chose to use "in the classroom."

[sjrcpa]

I haven't had it come up (yet?).

[rbynaker]

In the example given they "used their computer" and were "on their cell phone."  I don't see any additional out-of-pocket expenses here anyway.  Just smells like an attempt to convert existing non-deductible personal expenses into tax deductions.  The OP even mentioned that the school system covered the costs of the additional apps required.

[sjrcpa]

It pays to read all the details, doesn't it? I agree.

[abctax55]

Yep, Rick is paying much more attention than I did.  I focused on the fact the EE expenses no longer allowed for Fed purposes, not on whether they were even really *allowable* EE expenses.   Maybe I should take the rest of Valentine's Day off 😍

[BobKamman]

Public school system?  Out-of-pocket expenses for qualifying organization.  Let's say these are parochial schools and the teachers pay for their own computers and software.  Still not deductible?  Does it make a difference if the only subject they teach is religion?  What if they are volunteers, not salaried?  Is it any different from the deacons who pay for the supplies to print the church bulletins?  

People who make up the rules as they go along will always say "employees can't donate to the nonprofit they work for."  I haven't found any cases to support that.  

[sjrcpa]

I agree that employees can donate to the nonprofit they work for.

But if the "donation" is of stuff that you, and only you, use is it really a donation to the organization?

[BobKamman]

@sjrcpa "But if the "donation" is of stuff that you, and only you, use is it really a donation to the organization?"

Let me answer that question . . . with a question.

Go to Pub 526.

"Church deacon. You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon."

They don't tell you they are talking about Catholics, but that's a major religion with a permanent diaconate program.  And many of the deacons are paid.  As of Feb 6, 2021, the average annual pay for a Catholic Deacon in the United States is $38,324 a year. 

So two deacons walk into a bar where you are relaxing on April 16.  You get into a discussion about deducting vestments.  Are you going to tell them that it only counts if they wear each other's?

[JOFI]

When this legislative provision was drafted, I doubt anyone in Congress would have conceived of a world where teachers were instructing their students from their homes.

The debate on this thread is silly.  It is is difficult to conceive of any teacher who does NOT spend $250 on non-reimbursed expenses, and the idea that anyone would ever be audited or questioned for claiming such a minimal amount is ridiculous.  

[Camp1040]

The $250 above the line deduction is not being debated, the employee business expense misc deduction subject to 2% of AGI , Is what I understand the question to be.

[itonewbie]

I agree this is purely an academic discussion and should have little tax effect, if any at all, since it is likely that eligible educators are mostly maxed out on the $250 limit even without taking these expenses into account.

I am also less concerned about the phrase "in the classroom" but more about what categories of expenses may be deductible.

In the JCT report for Job Creation and Worker Assistance Act of 2002, under which the provision was created, the word "classroom" only appears in the subject heading "F. Deduction for Classroom Materials".  Again, when this provision was amended by the Education Tax Relief Act of 2015, the JCT report cited the "Committee recognizes that many elementary and secondary school teachers provide substantial classroom resources at their own expenses" as the reason for the change.

There is no mention within either JCT report that "classroom" should be a criterion for the deduction.  In any case, it would be unrealistic to restrict qualified expenses to those that are incurred "in the classroom" as many of these expenses are incurred while eligible educators are at home (e.g. computer equipment and subscription for software) although the materials produced would ultimately be used inside a classroom.  It would, therefore, be more reasonable to interpret "classroom" as being a setting instead of a physical structure.

The JCT report of 2002 makes clear that congressional intent was to ensure that "ordinary and necessary business expenses" otherwise deductible under §162 and subject to the 2% floor may be deductible above-the-line by eligible educators.  Rather than liberalizing the deduction based on §162, the Congress confines the deduction to only those specific categories of expenses outlined in the current subparagraph (a)(2)(D)(ii).  In fact, Congress found it necessary to expand these categories of expenses to include costs of professional development with the enactment of the Education Tax Relief Act of 2015.

If Congress had intended for §162 to govern what may be deductible under §62 for educators, there would have been no need to specify what expenses may qualify when the provision was first introduced and subsequently expand that to include costs of professional development.

If the question is whether cell phone calls are deductible, I would be inclined to say no, not because these are not legitimate expenses under §162 but because these do seem to fit the specific categories of expenses outlined under §62(a)(2)(D)(ii).

[BobKamman]

The law was probably not drafted by an English teacher.  What does the final phrase "used by the eligible educator in the classroom" modify, anyway?  Just "supplementary materials," or the whole laundry list?  And it's like an afterthought to the first category, which involves continuing teacher education.   

§62(a)(2)(D) Certain expenses of elementary and secondary school teachers
The deductions allowed by section 162 which consist of expenses, not in excess of $250, paid or incurred by an eligible educator—
(i)by reason of the participation of the educator in professional development courses related to the curriculum in which the educator provides instruction or to the students for which the educator provides instruction, and
(ii)in connection with books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services) and other equipment, and supplementary materials used by the eligible educator in the classroom.

[sjrcpa]

OK. I learned something new today.