IRS reminds teachers to keep receipts this year

The time to file annual tax returns if fast approaching, and the Internal Revenue Service is reminding teachers and other educators to save their receipts for the purchase of books and other classroom supplie for a specific deduction meant for such expenses.

The Emergency Economic Stabilization Act of 2008 reinstated the educator expense deduction which had expired at the end of last year.

"Many teachers dip into their own pockets for classroom supplies," said Michael Devine, IRS spokesperson. "The reinstatement of this deduction gives educators a tax break in 2008 and 2009." The deduction is available to eligible educators in public or private elementary or secondary schools. To be eligible, a person must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.

An educator may subtract up to $250 of qualified out-of-pocket expenses when figuring their adjusted gross income. This deduction is available whether or not the taxpayer itemizes deductions. Expenses incurred any time during 2008 may qualify for the deduction.

Qualified expenses are non-reimbursed expenses paid or incurred for books, supplies, computer equipment including related software and services, other equipment and supplementary materials that are used in the classroom.

The IRS suggests that educators keep records of qualifying expenses, noting the date, amount and purpose of each purchase.

The Internal Revenue Service also reminds taxpayers they have just a few days left make their final tax-related financial moves for the 2008 tax year. Planning now may save time -- and perhaps even money -- later.

Contribute to a Retirement Account

The maximum IRA contribution for 2008 is $5,000 and $15,500 for 401(k) employer plans. If you're 50 or older, those numbers increase to $6,000 and $20,500, respectively.

The "Saver's Credit" helps workers whose income is generally less than $53,000 offset part of the first $2,000 they voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs.

Converting a traditional IRA into a Roth IRA may also be a long-term tax saving solution.

Charitable Contributions

Make contributions to charity no later than Dec. 31. Non-cash contributions must be in at least good used condition to be deductible and don't forget that the IRS now requires a receipt for any cash contributions.

The Heartland Disaster Tax Relief Act suspends the percentage-of-income limits that would normally apply when taxpayers make qualifying cash contributions to a public charity for disaster relief efforts related to certain areas in Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska or Wisconsin.

Sell the Losers

Consider a portfolio adjustment, up to $3,000 can be deducted in capital losses.

First-time Homebuyer Credit and Property Tax Deduction

The Housing and Economic Recovery Act offers first-time homebuyers credit of up to $7,500. It also has a provision that increases an individual taxpayer's standard deduction by the amount paid for state and local property taxes for those who do not itemize deductions.

Beware of scams

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