IRS Erroneously Denies Educator Deduction Claims

During its annual review of the tax filing season, the Treasury Inspector General for Tax Administration (TIGTA) discovered the IRS was incorrectly denying educator expense deductions for some taxpayers.

Teacher DeskThe deduction

In 2014, qualified educators could reduce their income by up to $250 for classroom related expenses. This deduction is available whether or not a taxpayer itemizes their deductions.

The problem

The IRS was denying the deduction if the taxpayer could be claimed as a dependent on someone else’s tax return. This denial impacted young teachers and others who could use the tax benefit.

After TIGTA notified the IRS of their concerns, the IRS acknowledged their error and updated processing procedures for their tax examiners. Unfortunately, not before denying over $53,000 in deductions.

What you need to know

The $250 educator expense deduction is one of the tax provisions that is repeatedly expiring only to be extended once again by late Congressional action. As of now the benefit is not available in 2015. In all likelihood, the benefit will be available once again. In the meantime,

Paperclip Bullet Point If you took the deduction in 2014 and you are challenged by the IRS, ask for help. A quick review and clarifying letter should help you retain your deduction.
Paperclip Bullet Point If the tax law is extended unchanged into 2015, remember you can take the deduction even if you can be claimed as a dependent on someone else’s tax return.