It is usually seen that teachers tend to spend from their own pockets when it comes to little classroom expenses. A recent report says that about 99.5 percent of teachers of public school use their own money to cover the classroom expenses. Good news to all such teachers is that now they can claim a tax deduction for such expenses and get some relief in that aspect. This tax deduction is called the ‘Educator Tax Deduction’ and up to $250 can be claimed by a teacher.
However, there are some criteria that decide whether a teacher is eligible for this tax benefit or not. These criteria are:
- A teacher cannot claim the Educator Tax Deduction if he/she has received the reimbursement for the classroom expenses.
- You can either be a teacher, principal, tutor or aide from kindergarten to class 12th to qualify for this benefit.
- You need to complete at least 900 hours of teaching hours every year at a government certified primary or secondary school.
- This tax benefit can be claimed by teachers of religious, private or public schools.
- This means that tutors teaching subjects of degree courses after 12th class are not eligible for this tax benefit. Also, colleges and homeschooling tutors or parents cannot avail this tax deduction.
Teachers can claim tax deductions if they have spent on the following items:
- Textbooks
- School supplies
- Computer software or hardware equipment
- Athletic tools purchased by physical training tutors
Retirement plans & Strategies for teachers
Most of the teachers are eligible for a pension after retirement but the amount depends on many aspects such as service tenor, last drawn salary, pension percentage decided by the employer, etc. The pension also depends on the type of school i.e. whether you are a private school teacher or a public-school teacher.
These are some of the strategies that a teacher can opt after retirement:
Don’t Be Pension Dependent
Relying on pension alone will not be a wise thing especially when there are so many investment opportunities in the market. Teachers can utilize the same investment instruments which are used by employees of the private sector to maximize the returns post-retirement. Some teachers also think of working after retirement which is a good option but it depends on the health of the teacher and the other responsibilities, he/she will be entitled after retirement.
Tax-advantaged Plans
Investing in a tax-advantaged plan such as 403(b) would be a smart decision as it will help you to save taxes after retirement by paying them in advance. Availing life insurance for family members, disability insurance, etc. would also secure your future after you retire from your services.
Speak With a Financial Advisor
It is always advisable to seek help from a professional expert rather than designing a post-retirement plan by yourself. There are many financial advisors who provide valuable insights and advice to the teachers at a nominal charges .
Conclusion
There are different investment tools and tax benefits that you can avail as a teacher both while working and after retirement. To enjoy all these benefits, you either need to research on them or take help from a professional expert.
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