Every year I usually get several letters asking if there is any way homeschool expenses can be written off on taxes.
Homeschools in most states cannot be run as a business nor even as a non-profit as you do not charge your own children for their education, and you provide no community service to others than your own family. Your intent is not to make a profit, which is the rule-of-thumb for the IRS regarding home businesses. It is more like a hobby or paying for piano lessons. You are not under the control of a board of directors, unless you go to a lot of trouble to form a non-profit association. You’d probably have problems being allowed to do this for a homeschool.
No, donations of money or educational supplies to your homeschool may not be written off on the taxes of your kindly relatives.
I was asked if homeschooling could be regarded as a hobby and thus you could make some hobby deductions. This would be tough as the IRS regulations say you can only deduct up to the amount of income you make from the hobby.
Saying that, you can start ANOTHER kind of educational business, such as a tutoring service, in which case you would fall under tutoring laws and not homeschooling laws. You can start a private school, and thereby fall under THOSE laws. However, you still can’t write off any expenses but those incurred in support of paying customers.
You cannot contribute to your own child’s K12 education and get any tax deduction for it, no more than if you sent him to a private school and tried to write off the tuition. IRS regulations are pretty clear that you can only write off educational expenses that apply to post-high school expenses. The IRS states:
“For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses, earlier). The student must have either a high school diploma or a General Educational Development (GED) credential.”
You may take a charity donation tax deduction for donations to 501(C) non-profit homeschool organizations. Most state homeschool associations are now non-profits.
If you donate used curriculum to a non-profit, such as your local library, and carefully record the value of the donation, you may take this as a material donation to a charitable organization. Get a receipt.
Tax Deductions for Parents of Children With Disabilities
Unique tax benefits are available to families who have children with special needs. And thanks to recent changes in the tax code, there are opportunities to save substantial amounts of money at tax time.
Publication 970 (2023), Tax Benefits for Education
For use in preparing 2023 Returns. Watch for new form for future returns.
Tax Credits
There are now three states which have tax credits for homeschooling: Illinois, Minnesota and beginning with 2009 tax year, Louisiana.
Publication 119, Education Expense Credit General Rules and Requirements for Home Schools
This Illinois document provides home schools the requirements for qualified education expenses.
Qualifying expenses for the education credit and subtraction in Minnesota
Taxpayers who home school their children may have questions about which education expenses are required as part of a “normal school day” (that is, expenses commonly required and purchased for subjects normally taught in public school grades K12). This fact sheet should help answer questions about qualifying home school expenses for the K-12 education subtraction and credit.
Deductions For School Tuition, Home School Educational Expenses, And Public School Educational Expenses in Louisiana
Parents of home school students in Louisiana will be allowed to deduct expenses for instructional materials. The eligible amount can be deducted from the parent’s state income tax. For 2011 and forward, the deduction is for 50 percent of the costs paid per dependent, limited to $5,000 if your dependent is home-schooled or attends a public school. If your dependent is enrolled in a nonpublic elementary or secondary school, the deduction for elementary and secondary school tuition is for actual costs paid per dependent, limited to $5,000.
If you want the same benefits in your state, you’ll have to get some grass roots support for a law like Minnesota’s or Louisiana’s. Note that the law is for ANY parent purchasing educational material for their children. I do not know exactly what constitutes “required expenses” under this law. My guess is that it is for only those items that schools require their families to purchase. It may only include materials such as pencils and paper, and not include something like a backpack. It may include a new microscope, and then again it may not. Does family membership in a local museum count? Most likely only a membership for children MIGHT count, and then, maybe such a membership is not considered a “school supply.” Only a CPA can answer these questions for you.
Is the tax credit great enough to offset the invasion into your privacy? Do you need the tax credit badly enough to tell the state what you have been buying to educate your child with? What if someone “up there” doesn’t approve of your expenditures? Just something to consider. I hear that the deduction may result in tax payers paying about $35 less in taxes. Less than the price of one good math book these days. How much is your freedom worth?
I often ask homeschoolers if maybe they don’t think they get MORE use out of some things their tax dollars go for than average families. Most will admit to being heavy users of the public library and the local and regional parks. “Carschoolers” joke about probably using up more highway taxes than most!
State Tax Deductions or Credits for Homeschooling
Deductions For School Tuition, Home School Educational Expenses, And Public School Educational Expenses in Louisiana
This statute allows an income tax deduction for educational expenses paid during the tax year by a taxpayer for home-schooling children. The deduction is for 50 percent of the actual qualified educational expenses paid for the home-schooling per dependent, limited to $5,000. Qualified educational expenses include amounts paid for the purchase of textbooks and curricula necessary for home-schooling. The total amount of the deduction may not exceed the taxpayer’s total taxable income.
Tax Shelters
Coverdell Education Savings Accounts
Coverdell ESAs have an annual contribution limit of $2,000 (compared to their predecessor’s $500) and the funds can be used not only for college costs, but also for expenses in grades K-12. Families with children in public, private and religious schools can use the accounts to pay for things like books, supplies, after-school programs, tuition, tutoring, and even home computers. Although contributions to an ESA are not tax deductible (they weren’t for an education IRA either), the interest that accumulates is tax free, and withdrawals are not subject to taxation if used for qualified expenses. A noteworthy component of the program allows third parties, including relatives, friends, corporations, unions, and organizations, to contribute to an individual’s ESA.
Other Homeschool Sites on this Topic
Are there ways of getting tax credits for home schooling?
You may be wondering if the federal government provides any tax benefits to help homeschooling families recoup some of their costs. Unfortunately, the answer is no. There are no federal tax credits or deductions that apply specifically to homeschoolers.
Only a few states offer tax breaks for homeschooling families. They include:
- Illinois: Illinois offers the Education Expense Credit for eligible homeschool families, which is worth up to $750 per year.
- Indiana: Indiana families may be eligible for a tax deduction of up to $1,000 per year for homeschooling expenses paid out of pocket.
- Louisiana: The state of Louisiana offers a generous tax deduction of up to $5,000 per student for homeschooling families.
- Minnesota: In Minnesota, families that homeschool may be eligible for a tax credit or a tax subtraction, either of which can help to reduce tax liability for the year.
- Iowa: Starting in 2021, a proposed rule change will extend Iowa’s textbook tax credit to homeschooled students, provided that the textbook or instructional material is also required by a school in Iowa. The tax credit covers 25% of the first $2,000 of the costs of textbooks and instructional materials. The new rule takes effect on April 13, 2022.
Homeschooling doesn’t allow families to opt-out of paying state and local taxes that contribute to funding for public schools.
Dear Uncle CHiN
Can’t we deduct the expenses of homeschooling from our income taxes somehow? Signed, Wrung-out Taxpayer.
Home Education Tax Credit? No, Thanks!
While the idea of a tax deduction for homeschool materials may be appealing, consider that any government plan comes with requirements and restrictions. By Shay Seaborne.
Homeschool CPA
The simple answer is “No; there are no tax credits for homeschool expenses from the federal government.” The longer answer is “Maybe, depending on what state you live in.”
Homeschool Tax Credits: Pro and Con
VaHomeschoolers’ annual survey shows that Virginia’s home educators are divided on the subject of homeschool tax credits. Read the points below, and decide whether you are pro or con.
