As a former homeschooling parent, a discussion on whether or not it was a frugal move came up regularly. To decide this, one has to factor whether or not public school was the alternative for their kids, what rights homeschoolers have in their area, what type of homeschooling they'd be doing, what resources are available to their family for free, and much else. For those that do end up spending a decent amount of money on homeschool materials, many would want to know whether these expenses are tax deductible. I know locally they aren't, but as I'm not in the US, I figured I'd share this handy post sent to me that explains how it works in the US.
Have you ever wondered if the money you use toward homeschooling your children is tax-deductible?
With the new year, taxes are beginning to enter many peoples' minds. For various reasons, many families chose to homeschool their children during the 2020 school year.
If you are new to the homeschool lifestyle, you may be wondering which homeschooling expenses are tax-deductible?
Answering this question is complicated. Read on to find out what tax breaks, if any, are available for homeschooling parents in your area.
How Much Does Homeschooling Cost?
On average, homeschooling costs between $700-1800 per year, per child.
The cost depends on factors like which homeschool curriculum you choose to use, whether you are part of an online homeschool program, and if you are connected with other homeschooling families and can share educational resources.
Are Homeschooling Expenses Tax-Deductible?
On a federal level, the expenses incurred through homeschooling are not tax-deductible. While there is a federal tax deduction for "eligible educators," it is not applicable if you are a parent or guardian homeschooling your child.
The reason for this is the tax law definition of a "school." Since homeschool is not defined as a "school" for federal tax purposes, homeschool teachers or parents do not qualify as "eligible educators."
State Tax Deduction
Four states offer tax breaks for families who homeschool. These include Illinois, Indiana, Louisiana, and Minnesota. Find out more about your state's tax law here.
Illinois
Illinois offers a tax credit for families with K-12 students under the age of 21 for 25% of educational costs after the first $250, with a maximum credit of $750. Qualifying expenses include textbooks, activities, lab or activity fees, and tuition.
In 2018, the state-imposed an Adjusted Gross Income limit of $500,000 for married families and $250,000 for non-married families.
Indiana
Indiana residents can claim a tax deduction of $1,000 per child that is homeschooled or enrolled in a private school. Eligible expenses include textbooks and other school supplies, software, tutoring fees, and private school tuition.
Louisiana
Louisiana offers a deduction of 50% of education expenses up to $5,000 per child. Qualifying expenses include textbook costs and curriculum fees. The total deduction cannot exceed the family's total taxable income.
Minnesota
Minnesota provides a K-12 Education Credit of up to $1,000 per child for any student who is enlisted in a public or private school, including homeschooling. The credit covers education costs like textbooks, tutoring fees, and after-school academic programs.
The Adjusted Gross Income limit for this program is $37,500 for families with one or two dependents and increases by $2,000 for each additional child.
Also, Minnesota residents can claim an education deduction for students enrolled in any public or private school, including homeschool. The maximum deduction per student is $1,625 for grades K-6 and $2,500 for grades 7-12.
There is no Adjusted Gross Income cap for this program.
529 Savings Plans
A 529 savings plan is a tax-free investment account to pay for education expenses. Neither the investment earnings nor the qualified withdrawals are taxed, making this an excellent option when saving for your child's education.
Previously, 529 savings plans were solely for paying college tuition. Primary education and homeschooling expenses were not classified as qualified withdrawals from a 529 savings account, but that changed in 2019.
Under the new tax law, families can use up to $10,000 per year for elementary, middle, or high school costs (including public, private, and religious schools) as well as homeschooling expenditures.
Grants and Public Funding
Tax deductions and credits are not the only way to get financial help for homeschooling costs. Many local governments and school districts offer grants and public funding to homeschool families. Some groups and coalitions support homeschooled students through grants and scholarships.
Public Funding
To access public funding to help cover the costs of homeschooling, contact your local school district to apply.
Assistance could be available to help pay for learning materials like textbooks, computers, technical equipment, and even activity costs like sports team fees and equipment.
Private Grants
Most public grants are directed at large organizations that serve families through local chapters.
These organizations not only help with funding but are also a wonderful way to connect with other families who are homeschooling their children. The Coalition for Responsible Home Education and Home School Legal Defense Association are great places to start.
Financial Assistance for Students with Disabilities
Although there are only a select few states that offer tax deductions for homeschooling, more state assistance is available for students with disabilities.
For example, North Carolina offers a school voucher program for students with qualifying special needs. These vouchers are worth up to $4,000 per semester, or $8,000 per school year.
Ultimately, what matters most to parents is what is best for their child. Although the decision to homeschool your children may seem daunting at first, rest assured there is support available from various government programs and private organizations.
Homeschooling can be a rewarding experience for both parents and children. But it can also be complex to figure out all of the logistics come tax time. Hopefully, this article helped clear up some of your questions about the financial assistance available for homeschool families.
If you're a homeschooling family, how much would you say you spend on average for homeschooling expenses?
Thank you! This information was very helpful for our family. We homeschool our 3 kids in Indiana and are also looking at some part-day private school options.
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