2013 Tax Topics for North Carolina Educators

Tax deductible amount of NCAE/NEA/Local Dues

Each year many NCAE members ask how to deduct the dues that they pay to NCAE/NEA and the local on their tax return as well as how to calculate the deductible amount.

Association dues paid by educators to NEA and your local associations are fully includable with other types of deductions as miscellaneous itemized deductions. The tax deduction for association dues paid by educators to NCAE is required to be reduced by an amount calculated each year related to NCAE’s political activities. Even though these political activities are a vital function of NCAE for its’ members, the tax laws require the dues tax deduction be reduced for professional associations that engage in lobbying activities on behalf of its’ members.

NCAE’s external auditors have calculated that for 2013, the tax deduction claimed for NCAE dues paid by educators must be reduced by 10%. The miscellaneous itemized deductions for NEA, NCAE and local association dues are added to other miscellaneous itemized deductions and shown as itemized deductions on Schedule A of the tax return. The total of these miscellaneous itemized deductions are tax deductible to the extent they exceed 2% of your adjusted gross income.

Please be aware that NCAE/NEA/Local dues are collected from paychecks or from your checking account or credit card (EFT) based on the school year but, for IRS tax deduction purposes, the amount that was deducted from your paycheck, checking account, credit card or paid by check during the calendar year of 2013 (irrespective of which school year it applies) is figured into the tax deduction on your 2013 tax return.

Contributions to the North Carolina Foundation for Public School Children (the NCAE Foundation) are fully tax deductible as charitable contributions if you itemize your deductions.

$250 Out-of Pocket Classroom Expenses are still tax deductible for 2013

Under the IRS rules, if you are an eligible educator, you can deduct up to $250 of any unreimbursed expenses paid or incurred for books, supplies, computer equipment, other equipment, and supplementary materials used in the classroom; these expenses must be paid or incurred during the tax year. If your spouse has qualified out of pocket educator expenses and you file jointly, you can claim up to $500. The best part? This is an above-the-line deduction, meaning that you can take the deduction even if you do not itemize.

Of course, if you itemize, you can also claim job-related expenses above the $250 limit on a Schedule A, subject to the 2% rule (the 2% rule means that you can only deduct expenses which are in excess of 2% of your adjusted gross income). But no double dipping – you can’t claim the same expense at both places. The same rules for record-keeping apply to educator expenses as with most deductions so keep excellent receipts.

Eligible educators are defined as teachers, instructors, counselors, principals or aides for kindergarten through grade 12. To be eligible, you must work at least 900 hours a school year in a school that provides elementary or secondary education, as determined under state law.

Time for filing your 2013 Individual tax returns

The IRS has announced that as of January 31, 2014 it can start processing individual tax returns for 2013. In the interim, taxpayers can start working on their tax returns, but they should not submit their returns until the IRS systems are ready to process 2013 tax returns. This later opening date for individuals to file their 2013 tax returns will allow the IRS adequate time to program and test its tax processing systems. The annual process for updating IRS systems saw significant delays in October due to the 16-day federal government closure. The IRS cautioned that it will not process any tax returns before January 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.

Please consult your professional tax advisor to see how this information affects your personal tax situation.

 

–Thomas M. Herbert, CPA

 NCAE Business Manager