2016 Year-End Income Tax Planning Enhancement of School Teachers’ Deductions

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Historically, teachers have been allowed an “above the line” deduction (with an annual cap of $250) for various school supplies. However, starting in 2016, in addition to allowing teachers a deduction for school supplies, the PATH Act allows teachers an “abovetheline” deduction (with an annual cap of $250) for amounts paid for certain professional development courses. Such courses must be related 1) To the curriculum in which the teacher provides instruction, or 2) To the students for whom the teacher provides instruction.

Before this change, a teacher’s unreimbursed expenses for professional development were classified as miscellaneous itemized deductions subject to the 2% threshold which, many times, caused the teacher to get little or no tax benefit from the expenditure. Starting in 2016, teachers should be aware of this change and retain documentation of unreimbursed costs they incur for professional development courses. Also, the $250 cap on this deduction is indexed for inflation starting in 2016. However, for 2016, the cap remains at $250 even after considering inflation.

The deduction likely applies also for the purchase of college credit associated with the professional development. You should consult your tax consultant for details and verification.