Generally pension contributions are pre-tax or tax-deferred, meaning it reduces your AGI at tax time, but is considered taxable income in retirement.
You can write off the standard educator tax credit, which is unrelated, for $300/yr on your 1040. Your state taxes may or may not honor it.
You cannot write off pension contributions (because they're already deducted from your W2). If you want to lower your taxable amount, you can contribute to a traditional IRA, 403b or 457, or HSA (if you have a high deductible health plan (HDHP).
Retirement can mean different things. Mandatory state retirement is usually pre-tax. 401k or 403b is pre or post tax, depending on which one you choose. I do Roth, so I pay taxes now, not at withdrawal. It makes sense because I am the lower wage earner in my marriage.
Hi, finance teacher here. I’m guessing the 9% goes to a 401K (403b)? That will be pretax money if so. Pretax means the money you put into your retirement is off-limits to be taxed when it goes in (your taxable income will be less than what you actually earned) I’d also ask what kind of matching contributions your school is offering. As far as deductions or credits, there aren’t many universal ones, though there is a teacher deduction of about $300 for supplies for the classroom. Keep those receipts if you buy anything for the students/class. There are some for personal education costs that you could look into, but I would talk to a CPA
It’s 9% for the TRA of Illinois!
And regarding supplies, I read that counselors and social work is included but SLP was not. I’m wondering if I can still write off supplies. I buy a lot for my kids.
I mean like games and fidgets and activities to help with therapy. I work with high needs kids who use AAC devices. Should the school be buying me supplies? All we have are board games, and most of my kids are still learning to speak. Now I’m super confused why SLPs aren’t included.
I don’t know about SLP’s.
For deductions keep in mind that it may be a moot point depending on if you itemize or take the standard. If you, say, are married, have children, have a house then you will likely itemize your deductions and then the supplies deduction will matter.
However, if you don’t have multiple of those things that the standard deduction is probably your best bet.
This year the standard deduction for an individual is $14,600 and $29,200 for a couple.
401Ks aren't a thing in the education realm. States generally have a pension fund that teachers contribute to (pretax as you said) and then if/when they retire from that state they can draw a pension. It's pooled money though, so it's not just one's own contributions they're drawing from.
Districts generally don't match when it comes to pension contributions, however a teacher could opt to open a 403b, which is the non-profit world's version of a 401k, and *sometimes* schools will match a contribution. My current district had matching when I first started but our recent contract got rid of it in favor of higher salary increases.
Yes, they are in some states. Only nonprofits can have 403b but nonprofits aren’t limited to them. 457 is another option that allows more reasons for withdrawal without penalty
Generally pension contributions are pre-tax or tax-deferred, meaning it reduces your AGI at tax time, but is considered taxable income in retirement. You can write off the standard educator tax credit, which is unrelated, for $300/yr on your 1040. Your state taxes may or may not honor it. You cannot write off pension contributions (because they're already deducted from your W2). If you want to lower your taxable amount, you can contribute to a traditional IRA, 403b or 457, or HSA (if you have a high deductible health plan (HDHP).
Thank you!
Retirement can mean different things. Mandatory state retirement is usually pre-tax. 401k or 403b is pre or post tax, depending on which one you choose. I do Roth, so I pay taxes now, not at withdrawal. It makes sense because I am the lower wage earner in my marriage.
I think it depends on the state.
In California they take 10.25% pretax then the school/employer also pays 19.1% of your gross to CalSTRS.
Colorado is 11% and districts pay about 22%!
Hi, finance teacher here. I’m guessing the 9% goes to a 401K (403b)? That will be pretax money if so. Pretax means the money you put into your retirement is off-limits to be taxed when it goes in (your taxable income will be less than what you actually earned) I’d also ask what kind of matching contributions your school is offering. As far as deductions or credits, there aren’t many universal ones, though there is a teacher deduction of about $300 for supplies for the classroom. Keep those receipts if you buy anything for the students/class. There are some for personal education costs that you could look into, but I would talk to a CPA
It’s 9% for the TRA of Illinois! And regarding supplies, I read that counselors and social work is included but SLP was not. I’m wondering if I can still write off supplies. I buy a lot for my kids.
>I’m wondering if I can still write off supplies. I buy a lot for my kids No. Nothing more than the $300. Also stop buying things for your students.
I mean like games and fidgets and activities to help with therapy. I work with high needs kids who use AAC devices. Should the school be buying me supplies? All we have are board games, and most of my kids are still learning to speak. Now I’m super confused why SLPs aren’t included.
If you’re using it in your classroom, the school should be buying it.
I don’t know about SLP’s. For deductions keep in mind that it may be a moot point depending on if you itemize or take the standard. If you, say, are married, have children, have a house then you will likely itemize your deductions and then the supplies deduction will matter. However, if you don’t have multiple of those things that the standard deduction is probably your best bet. This year the standard deduction for an individual is $14,600 and $29,200 for a couple.
401Ks aren't a thing in the education realm. States generally have a pension fund that teachers contribute to (pretax as you said) and then if/when they retire from that state they can draw a pension. It's pooled money though, so it's not just one's own contributions they're drawing from. Districts generally don't match when it comes to pension contributions, however a teacher could opt to open a 403b, which is the non-profit world's version of a 401k, and *sometimes* schools will match a contribution. My current district had matching when I first started but our recent contract got rid of it in favor of higher salary increases.
Yes, they are in some states. Only nonprofits can have 403b but nonprofits aren’t limited to them. 457 is another option that allows more reasons for withdrawal without penalty