Is home-school expenses eligible for federal tax benefit?

Federal tax  benefit

The average expenditure for home-schooling comes to around $3,197 per year as per  Homefires: The Journal of Homeschooling Online. The expenses are money spent on setting up the home school, membership, periodicals, books, workbooks, software, CDs, Field trips and the list goes on.  The expense increases, because sometimes, families have to make home-school-related purchases such as computers or the home-schooling children like differently abled who need separate special educational consultants. But some of the expenses in home-schooling are considered for a federal tax deduction.

Tax benefits available on homeschooling Families

Federal Tax breaks.

For homeschoolers, no federal tax deduction or credits are set aside, but there are provisions under federal tax law which relieve some amount of monetary relief in federal tax. And amounts spend on special education and special therapy comes under medical expenses for differently abled children are tax-free. For more information visit   IRS Publication 502.

Charitable contribution deduction is another area where a person can claim a Federal tax break. The donation made to none profit home-schooling or used study material donated to non-profit home-school organizations can deduct the value of their material on their federal tax under Schedule A. So, keep a thorough record of charitable contributions to get the claim of deduction. For more information read IRS Publication 526.

Education Savings for Federal Tax Advantage

Coverdell Education Saving Account (ESA) is eligible for tax benefits for some of the homeschoolers. For those home-schooling if their home school operates as a private school, then only this type of saving account can be used for tax benefit. But this facility is available only in 14 states as per Homeschool Legal Defense Association. Kindly check the eligibility, before proceeding to take these benefits.

If you are eligible for these types of accounts, the benefactors can receive an annual contribution of up to $2,000, and the earnings are totally tax-free.  For more information read IRS Publication 970 .

Tax credits – From Three States.

Home-Schoolers can take credit on their state income taxes from three states namely Illinois, Louisiana, and Minnesota.   Illinois state allows the credit of 25% of a student’s qualified expense for the amount of more than $250.  At present these are the only states that provide state tax credits to homeschoolers. But in future this could expand.

529 Saving Plans

You can take the advantage of a 529 college saving account, where the family can save future savings expenses. And this account is designed to assist families to save for college and higher education expenses. The amount deposited in the 529 saving account grows in time. The interest earned is totally tax-free.  But this money should only be used for tuition expenses associated with colleges or universities.

Child Tax Credit

This helps families to get a tax break for qualifying children. Even if you are not filing the tax return you can claim the credit. For more information please refer  IRS Child Tax credit