47. Melanie is a full-time teacher of the fifth grade at Tern Academy. During th

Question

47. Melanie is a full-time teacher of the fifth grade at Tern Academy. During the year, she spends $1300 for classroom supplies. Upon the submission of adequate substantiation, Tern reimburses her for $600 of these expenses-the maximum amount of reimbursement allowed for supplies under school policy. [The reimbursement is not shown as income (box 1) on the form W-2 Tern sends to Melanie.] What are the income tax consequences of the $ 1300 if Melanie:
a. Claims the standard deduction?
b. Choose to itemize her deductions from AGI?

Explanation / Answer

a) If she are using the standard deduction - her only option is to claim "Educator expenses" She may only deduct $250. b) If she itemizes - in additional to claiming "Educator expenses"- she may deduct remaining employee's business expenses $700-$250=$450 which as above 2% of her AGI However - these are only her Miscellaneous Deductions - and her AGI is $20,000 - her deduction would be $450 - ($20,000*2%)=$50.

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