Deduction for Educator Expenses

If you are an eligible educator, you can deduct as an adjustment to income up to $250 in qualified expenses. You can deduct these expenses even if you do not itemize deductions on Schedule A (Form 1040). This adjustment to income is for expenses paid or incurred in tax years beginning during 2002 or 2003. Previously, these expenses were deductible only as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit.

Eligible educator. You are an eligible educator if, for the tax year, you meet the following requirements.

1. You are a kindergarten through grade 12:
   1. Teacher,
   2. Instructor,
   3. Counselor,
   4. Principal, or
   5. Aide.
2. You work at least 900 hours during a school year in a school that provides elementary or secondary education, as determined under state law.

Qualified expenses. These are unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics.

To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the tax year.

• The interest on qualified U.S. savings bonds that you excluded from income because you paid qualified higher education expenses,
• Any distribution from a qualified tuition program that you excluded from income, or
• Any tax-free withdrawals from your Coverdell education savings account.

Personal Credits Still Allowed Against Alternative Minimum Tax

The provision that allowed certain nonrefundable personal credits to reduce both your regular tax and any alternative minimum tax (AMT) has been extended and will be in effect for 2002 and 2003. This provision, as it applies to the AMT, was originally scheduled to expire after 2001. Without the extension, these credits could not have been used to reduce any AMT in 2002 or 2003.

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