tax tips — October 08, 2019

Education Tax Credits, Tax Deductions and Homeschooling

by Susannah McQuitty

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Homeschool parents are the ultimate DIY champions, between teaching different grades for each kid, ordering curricula, coordinating with other homeschool families for classes and field trips, and still managing to make lunch too.

If you’re a homeschool parent, you’re probably accustomed to doing things yourself and developing strategies based on research—but maybe you need a good place to start when it comes to your taxes. Look no further; today we’re going over how taxes work for homeschool families.

Are there tax breaks for homeschooling?

The short answer is no. For the most part, homeschooling doesn’t have tax benefits, but that might be a good thing. If there were tax incentives to homeschool, the state and local governments would have to get more involved with homeschool regulations to make sure that kids weren’t being pulled from public schools simply to boost a refund.

There are, of course, exceptions. Several states have tax breaks that are either designed for homeschoolers or are available for homeschoolers to use:

  • Louisiana’s School Expense Deduction is for 50% of your actual costs per child, worth up to $5,000.
  • Minnesota has the K-12 Education Subtraction and Credit. The subtraction works like an expense deduction and is worth up to $1,625 per qualifying child in grades K–6, and $2,500 for a qualifying child in grades 7–12; the credit, on the other hand, reduces your taxes owed, limited at 75% of your expenses, and there is an income cap.
  • Illinois has the Education Expense Credit, which is worth 25% of your expenses greater than $250 and is limited to $750.

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Can I deduct Scholarship Tuition Organization (STO) contributions or curriculum donations?

When it comes to donations, deductions for your monetary contributions or the value of donated goods works the same as any other charitable donations.

Some STOs award scholarships to homeschoolers, so you may donate periodically in the best interest of students applying for financial aid. If your STO is a certified 501(c)(3) charitable organization, you can deduct your contributions at the end of the year (provided you choose to itemize deductions). It’s not a great financing plan, as contributions don’t guarantee a scholarship, but it’s one way you can potentially support homeschooling and get a tax write-off.

Donating used curricula to a non-profit, such as your local library, can also get a deduction for the worth of the curriculum if you are able to itemize deductions. You’ll have to figure the value of the donated items and collect receipts to take the deduction, but it’s a simple way to clean out your school closet and get some tax relief while you’re at it.

What if I’m paid to teach homeschoolers?

Sometimes, you may offer a class for other households to join for a fee, or you may charge to tutor kids other than your own. In that case, if you’re operating for profit, you could deduct work-related expenses on a Schedule C as a self-employed person.

Be careful here, though—any materials that your kids use don’t count as work-related expenses, since that is for the personal use of your own family. If you buy five textbooks for a class and your child uses one, you can only deduct four as business-related expenses.

What happened to using 529 savings for homeschool expenses?

Unfortunately, you can no longer use 529 savings account funds to pay for homeschooling expenses. The Tax Cuts and Jobs Act of 2017 eliminated that tax break. The silver lining, again, is that the less kickback you get for homeschooling, the less control Uncle Sam has over how you run your classroom.

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