This post strays a bit from my focus on small businesses, but there are so many schoolteachers out there that have to spend their own money on school supplies that I think it is worthwhile. Most employees can only deduct employment related expenses that exceed 2% of their income, and then the deduction is only an itemized deduction which may or may not actually provide a tax benefit. However, since 2002 schoolteachers (K-12) receive a special “for AGI” deduction of up to $250 for their classroom expenses. The “for AGI” deduction means their gross income is directly offset and the taxpayer does not need to itemize their deductions (file schedule A) to receive the benefit.
New for 2016, in addition to classroom expenses, schoolteachers can now deduct the cost of professional development courses. Unfortunately, the maximum deduction is still only $250. However, the $250 is now indexed for inflation so it will slowly increase for years after 2016.
As always, feel free to email me at firstname.lastname@example.org with questions, comments or suggestions for future posts!
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