Income Tax "Do’s and Don’ts" for Homeschoolers
- Friday, April 04, 2014
It’s income tax season again in the United States, with the filing deadline (April 15) fast approaching. This is the time of year when many families cross their fingers and pray that the tax man will give them a refund—or at least that he won’t collect additional taxes and penalties. This tax season remember four “Do’s and Don’ts” to help maximize your family’s tax return and avoid making costly filing errors
1. Do Seek Out State Tax Breaks for Homeschoolers
At the state and local level, homeschoolers pay taxes to support the public schools, but few families that choose to educate at home will ever receive any benefit from those taxes. This reality has caused an increasing number of states to consider income tax credits or deductions specifically for homeschooling families. In 2012, Oregon, Virginia, and West Virginia considered state-level tax breaks. And though none of those efforts bore fruit, they are evidence that the idea is catching on.
Thankfully, a handful of states do offer some tax benefits. Be sure to consult your own state’s income tax guidelines to determine if yours is one of them. Of note, Illinois and Minnesota have for some time provided modest tax relief for homeschoolers. Other states with some form of homeschool-related tax benefit (for either individuals or businesses) include Arizona, Louisiana, Pennsylvania, and Florida.
Indiana is an example of a state that has recently added benefits. As of tax year 2011, Indiana families who homeschool (or send their children to private school) are authorized up to $1,000 per child as a deduction from their gross income, for such items as textbooks, computer software, and school supplies. Unfortunately, because this is only a deduction (and not an outright credit), experts say that the actual tax savings are less than $50 per child.
2. Don’t Attempt to Deduct Ineligible Expenses on Federal Taxes
The Federal Government does not offer any tax credits or deductions for expenses specifically associated with homeschooling your children. In fact, the Internal Revenue Service (IRS) expressly excludes homeschoolers from claiming such expenses. Republicans in Congress have discussed the possibility of a tax break at the federal level, but that is not likely to happen any time soon—and definitely not this tax season.
Some may be tempted to find “creative” ways to claim their homeschooling expenses. Don’t do it. For instance, although you may devote a portion of your home to the “business” of home education, that does not make your schoolroom a “home office” under the tax code. Homeschooling is not a business. While families should take advantage of every tax loophole available, do not try to stretch the regulations to cover expenses for which they were not intended. Not only could that lead to problems with the IRS, but it is also morally wrong.
3. Do Take Advantage of Charitable Contributions
Although you should not bend the tax rules, there are plenty of legitimate deductions and credits that can benefit your family. The charitable contribution deduction is a great example. Many homeschoolers are generous to others with their time, talents, and treasure. They often tithe at church, volunteer at homeless shelters, and donate items to food banks and the Salvation Army. These activities teach homeschooled children valuable lessons about morality, finances, and social services, and they also have an added advantage: They are fully deductible on your income taxes (but only if you itemize deductions and do not merely take the “standard” deduction).
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