Tax savings are back for educators

The Working Families Tax Relief Act of 2004 has reinstated the educator expense deduction, which had expired at the end of last year, for both 2004 and 2005. Expenses incurred any time this year may qualify for the deduction, not just those since the Act was signed October 4.

Up to $250 of non-reimbursable, out-of-pocket expenses is subtracted when figuring adjusted gross income (AGI). This deduction is available whether the taxpayer itemizes deductions on Schedule A. Education expenses over $250 can be taken as a miscellaneous deduction for those that file with itemized deductions.

Follow these tips to take advantage of the deduction:

·        Save receipts for books and other classroom supplies.

·        If you don’t have receipts, use credit card records or cancelled checks, or ask the stores for duplicate receipts.

·        Attach these records to your tax return file copy – you’ll only need them if you are audited.

For more information, call the IRS Tele-Tax system toll-free at 1-800-829-4477 and select Topic 458. Or go to the IRS Web site at www.irs.gov and use its search engine to find Tax Topic 458.