plymouth tax help

IRS Quick Tip: Educator Expense Deduction

educator-tax-deduction

Did you know that as an educator you can get an extra tax deduction that the standard non-educator people can’t? Well, you can. Maybe the IRS is just giving you a special thanks for the work do.  Either way you are special in the eyes of the IRS. If you are an eligible educator, you can deduct up to $250 or $500 if married filing jointly for expenses that you incur related to your job as long as they are not reimbursed. The expenses can be anything from books, classroom equipment, school supplies, computer equipment and software, and other materials that you use for your classroom and job. Specifically for courses in health and physical education the expenses can be related to athletics.

The expenses need to be incurred in the tax year that you are filing for. So for your 2015 tax return (due by April of 2016) the expenses have to be incurred this year in 2015. This deduction is claimed on line 23 of the 1040.

Eligible educators include teachers, instructors, counselors, principals, and aids. Also you need to work at least 900 hours a school year that provides secondary or elementary education (as determined by State Law).

These expenses are only deductible to the extent that they exceed the following amounts in the same tax year.

  1. Interest on US Savings Bonds that you excluded from income because you paid higher education expenses.
  2. Distributions from a qualified tuition program that you excluded from income
  3.  Tax Free Withdrawals from your Coverdell Education Savings Account
  4. Any reimbursed expenses not reported in box 1 of your W2.

If you’re an educator and you want to make sure you are taking all the deductions you can give us a call or send an email to info@pjftax.com.

What To Do If You Receive A Notice From The IRS

notice-from-irs

First of all don’t panic. The IRS sends millions of notices to taxpayers each and every year. In our practice many of our clients receive letters from time to time. It’s normal, it’s the IRS’ way of asking for more information or clarification on something, usually related to your tax return.If you happen to receive one of these letters here is what you should do:

  • Let you’re us know or whomever prepared your taxes - We will probably be able to give you a better explanation of what the IRS is looking for. Remember it doesn’t mean your tax return is wrong (most times it’s not) but they are just looking for some additional information.
     
  • Don’t Ignore the Notice – Amazingly some people think that if they ignore it their problem will go away. This doesn’t happen. And the IRS does not just forget about you. It might take them a while to reach out again but they will. If you ignore a notice or letter you risk having to pay additional risk and penalties. Most letters are quick and easy to respond to. It’s important to take care of these things right away.
     
  • No need to Visit the IRS – Most notices can be handled very easily without the need to call or visit an IRS office. There will be a phone number on your letter (upper right corner) that you can call if necessary but if you haven’t ever called the IRS, I don’t recommend it. It’s time consuming and can be frustrating. Try to handle it by following the instructions in the letter. If you do need to call have your notice and a copy of your tax return handy.
     
  • Follow the Instructions – There are usually specific things that you need to do that are outlined in the letter. Make sure you understand what they are asking for so that you can comply. If you don’t understand just ask. There is usually a number you can call on the letter or reach out to a Professional Tax Preparer.
     
  • Focus on the Issue at Hand – Each IRS notice focuses on one specific issue about your tax return in question. Just focus on what they are asking for and provide them with only the information they are looking for. Do not send any additional documents, explanations, or other information, only what they are asking for. More is not better in this case.
     
  • Correction Notices – A correction notice is a specific letter that is also one of the most common. It states that the IRS corrected something on your tax return. Usually no action is needed if you agree with the changes. It could be something as simple as a math error. When you receive this type of notice review the change and compare it to your tax return to make sure it makes sense. If you agree with the change no action is needed (unless they require a payment because of the change). If you do not agree you need to respond to the IRS right away. Write a letter that explains why you don’t agree. Include information and/or documentation that supports your stance. Include the bottom part of the letter (it should tear off cleanly) when you mail to the address shown on the lower left side of the letter. Give the IRS at least 30 days to respond to you.
     
  • Premium Tax Credit Letter – Another common letter is one that asks you to verify your premium tax credit. Most of the time they are just asking for a 1095-A which is a health insurance marketplace statement. Again, follow the instructions on the letter as best you can to ensure you receive your refund/credit as soon as possible.
     
  • Keep the Letter/Notice – I always recommend you keep a copy of the letter for your tax records. If you write a letter keep a copy of the correspondence too. You probably won’t need it but it’s a good idea to have on hand just in case.
     
  • Scams! – Sadly, there are a lot of scams that either through phone, email, or letter that try to seem like official IRS notices. They are looking to steal your identity or money. Know that the IRS never initiates contact with taxpayers by email, text, or social media. When in doubt ask before sending personal information and especially when sending payment information.