The News Virginian: Teachers impacted as tax breaks expire
media mentionPosted: Saturday, January 25, 2014 6:45 am
Brian Carlton [email protected]
According to the Internal Revenue Service, an estimated 4 million teachers spent more than $1 billion paying for school supplies between 2010 and 2013. When those teachers go to fill out federal income tax forms next year, they won’t be able to include those supplies as a deduction.
The Educator Expense Deduction was one of 55 tax breaks that expired on Dec. 31. It was created to help teachers cover the cost of supplies needed, things their district doesn’t reimburse them for. Teachers could get a deduction of up to $250 per year.
Middle school teachers provided the News Virginian with a list of items they normally buy, which include pens, colored paper, markers, scissors, rulers, gluesticks, copy paper, Kleenex, paper towels, notebook paper, paper clips, staples and band-aids.
Even though the deduction expired, it can still be used for this tax season, experts say.
“Any effect on individuals or families will come next year,” said Steve Wamhoff, the Legislative Director for Citizens for Tax Justice, a nonprofit group based in Washington D.C. “Since this was in effect for 2013 and that’s what this tax season focuses on, they get to use the break one more year.”
The reason this came up at all is due to the fact that rather than being permanent, tax breaks like the Education Expense Deduction are re-approved every two years. According to officials from the Congressional Research Service, those two-year deals are designed to make Congress review tax credits to make sure they’re still beneficial to the economy.
Bob Goodlatte, who represents Virginia’s 6th District in the U.S. House, said issues like this are why the tax code needs to be reworked.
“I have great respect for our educators and the work that they do each day,” Goodlatte said. “I have three sisters who were public school teachers, so I also understand the many challenges they face, including out of pocket costs for certain supplies. This is just another example of how the lack of tax certainty impacts every aspect of our economy, even our classrooms, and why Congress must act on meaningful tax reform.”
Goodlatte added that the tax code should work for families and businesses, rather than against them. A supporter of tax code change, Goodlatte said he would continue to support putting an end to the “broken tax system that exists in our country and providing American taxpayers with more certainty regarding our tax structure.”
Stretching further than teaching
In addition to eliminating the deduction for teachers, the New Year also saw college students impacted. Students or their parents could write off up to $4,000 in tuition and college fees. That’s one however which didn’t make the jump into 2014. In order to use the deduction during this tax season, a family would have had to pay all of the spring 2014 tuition and expenses before the end of December. Also, homeowners in the area had been able to deduct their mortgage insurance premiums, while getting an additional credit up to $500 if any energy-efficient improvements were made to the home. That includes new doors or windows. Both of those breaks expired on Dec. 31.
Other breaks, such as $14.3 billion in research credits, expired as well. The problem, Wamhoff said, is that this uncertainty damages the economy so that even if the credits are put back, it doesn’t fix the problem.
“A lot of the breaks are supposed to be incentives,” Wamhoff said, pointing to both the research credit and $12.2 billion in renewable electricity production credits offered. “You launch a new program, which requires more workers and can write it off your taxes. But people who are in charge of companies can’t wait until later in the year to budget. If Congress does add it back in, it’s too late,” Wamhoff added, “because these people have already made their business decisions for the year.”
Wamhoff also challenged any argument that there was no plan to pay for the tax deductions, so they had to expire. He pointed to bills like the 2011 Stop Tax Haven Abuse Act, which would have covered the cost of the tax breaks by closing loopholes in the code that allow companies that have headquarters in the United States but operate elsewhere from claiming foreign status, which prevents them from paying the same taxes as a local group would. The bill failed to pass in the U.S. House.