Most youth coaches will say that it’s not something they do for the money—they simply love kids and love teaching them the game. The good news for coaches is, there are a fewtax deductions you can take to get more money back at tax time.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Itemize to Claim Work-Related Tax Deductions
You must itemize to claim a deduction for employee work-related expenses. This means completing Schedule A with your tax return and taking a total deduction for all your itemized deductible expenses—not just what you spent on coaching—in lieu of the standard deduction for your filing status.
The standard deduction works out to be more than itemized deductions for many taxpayers, so itemizing isn’t always a good deal. TurboTax can help you decide which deduction is best for you by asking you simple questions.
The Educator Expense Deduction
A major distinction exists between coaching a school team as an employee and coaching your neighborhood’s Little League. If you’re a school coach and you also teach, you might be eligible for the educator expense deduction if you worked for the school at least 900 hours during the academic year.
You don’t have to itemize your deductions in order to claim the educator expense deduction. It goes on the first page of your tax return before you get around to deciding if you want to itemize or claim the standard deduction.
- You can claim up to $250 for expenses that you personally purchase for the team as an educator expense deduction, as long as the school does not reimburse you for the expenses.
- You must also be an educator to qualify for this deduction—i.e. you are employed by the school to teach or instruct in some manner
What Else Can Coaches Deduct?
You can also claim work-related expenses for items you spent money on in excess of $250, as long as you're an employee that does not get reimbursed for the expense. For example, if you spent $1,000 and the school paid you back only $400, you can still claim a deduction for $600, subject to some other rules.
This work-related expense deduction covers a lot more ground than just supplies and equipment you purchase. It includes:
- costs of medical examinations the school requires you to undergo to determine fitness
- subscriptions related to work
- travel and transportation expenses for work
- one-half of meals when away from home overnight on work-related business
- union dues
- work uniforms
- continuing education that keeps you current with your job’s requirements
You can deduct many expenses that are both “ordinary and necessary” to your coaching duties as an employee. You don’t necessarily have to be an educator to claim this deduction, but you need to be an employee. It must qualify as work. Otherwise, it’s a hobby.
The Two-Percent Threshold
Itemized deductions include many categories, one of them being “miscellaneous deductions.” Your work-related expense deductions fall under this umbrella. This category is subject to a 2% threshold—you can deduct only the portion of your expenses that exceeds 2% of your adjusted gross income, or AGI.
- If you spent $1,000 on coaching expenses and the school repaid you $400 of that, you might not be able to deduct the $600 balance, due to the 2% rule.
- If your AGI is $55,000, 2% of that is $1,100, so you could only deduct work-related coaching expenses that exceed $1,100.
- In this example, you can’t deduct the $600 as that is under $1,100.
- However, there are other miscellaneous itemized deductions that can be used to get over the 2% threshold. Investment expenses, tax preparation fees, legal expenses for generating income are some examples.
When Your Coaching is a Hobby
What if you coach your town’s Little League team as a volunteer? You’re probably not paid for this work, so the work-related deduction and the educator expense deduction are not available to you. But you might still be able to deduct some of your costs.
In this case, you’re spending money voluntarily on a hobby, not a job, and the IRS allows you to deduct some hobby expenses if you itemize. Hobby expenses are also a miscellaneous deduction, so they must exceed 2% of your AGI. But you’ll need at least some income from coaching because the amount you spend over 2% of your adjusted gross income can’t exceed the income earned from your hobby. For example:
- If your AGI is $50,000, you could only deduct hobby expenses in excess of $1,000, or 2% of that ($50,000 x 0.02 = $1,000 threshold).
- If you had $1,100 in expenses, you could deduct $100 ($1,100 - $1,000 = $100 you can deduct).
- However, you also must earn at least $100 from your coaching hobby to take the deduction.
Remember, with TurboTax, we’ll ask you simple questions and fill out the right tax forms for you to maximize your tax deductions.
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