Educator Expenses and Tuition and Fees Deduction

[stepitup]

I am a first year teacher who finished my college program last spring. I plan to run several scenarios in tax software once I get all my documents for 2016 to determine whether it will be better to take the Tuition and Fees Deduction or Lifetime Learning Credit but I'm thinking that it will be the later because it will lower my AGI and maximize my ACA subsidy. If I do take the deduction though, I will have a couple hundred dollars above the deduction limit.

My understanding of the Educator Expenses Deduction for teachers is that it can include Professional Development expenses. It doesn't specifically mention college level courses, but it seems like these generally could count as business expenses and so could count as Educator Expenses. But I wanted to check in here and see if anyone can give me a more experienced answer one way or the other.

Thanks!

[Rural]

 The educator expenses I'm familiar with are limited to $250, anyway. That's easily eaten up with buying pencils and paper and the like every single year, so it hardly matters about professional development.


 It's been a year since any of this was relevant to our situation, though – husband left the field. So check and see if the amount of the deduction has changed.

[BlueLesPaul]

In addition to what Rural said, there are some requirement on how many hours you have to work and some other stipulations, This link is a good place to start.

https://www.irs.gov/taxtopics/tc458.html

[teen persuasion]

I am a first year teacher who finished my college program last spring. I plan to run several scenarios in tax software once I get all my documents for 2016 to determine whether it will be better to take the Tuition and Fees Deduction or Lifetime Learning Credit but I'm thinking that it will be the later because it will lower my AGI and maximize my ACA subsidy. If I do take the deduction though, I will have a couple hundred dollars above the deduction limit.

My understanding of the Educator Expenses Deduction for teachers is that it can include Professional Development expenses. It doesn't specifically mention college level courses, but it seems like these generally could count as business expenses and so could count as Educator Expenses. But I wanted to check in here and see if anyone can give me a more experienced answer one way or the other.

Thanks!

I'm confused by the part I bolded - the tuition and fees deduction could lower your AGI, but the latter part (Lifetime learning credit) wouldn't.  It could lower your taxes, as it is a credit.

[stepitup]

I'm confused by the part I bolded - the tuition and fees deduction could lower your AGI, but the latter part (Lifetime learning credit) wouldn't.  It could lower your taxes, as it is a credit.

Thanks for your reply. I understand your confusion. It was caused by me messing up the whole former/later thing. What I meant to say is that I think I'll be taking the Tuition and Fees Deduction to lower my AGI. But it does mean that the deduction is capped at $4,000.

For what it's worth too I've read the publication. I also am lucky that I'm generally well supported supply wise from my school. The school itself picks up most basic supplies. The state also gives us teachers about a $100/school year that we can get reimbursed for extra supplies. All that's to say that it would save me money if I could designate the $250 to use towards the excess tuition.

[Livingthedream55]

https://www.eitc.irs.gov/Other-Refundable-Credits/educompchart

Take a look at the chart in the link above. You can only pick one per student per year.

Tax credits provide a dollar-for dollar reduction of your income tax liability. This means that a $1,000 tax credit saves you $1,000 in taxes. So the American Opportunity Credit is the best deal!!!

On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket so a $4,000 deduction might mean a reduction of taxes of $600 (using a hypothetical 15% tax rate).

So you should run the scenario to see which of the three options is more advantageous (I know you have ACA considerations also.)