Can You Write Off Homeschooling & Tutoring Expenses?
Tax pros are here to explain everything parents need to know about filing taxes this year.
During the 2020 pandemic, a huge number of parents stepped into the role of homeschooling out of necessity. So can you deduct homeschooling and tutoring expenses in your 2020 taxes? Parents deserve something for doing all this extra work, right?
"Homeschooling expenses are not tax-deductible," Tim Yoder, certified CPA, Tax & Accounting Analyst at FitSmallBusiness, tells Romper. Other tax pros back up this idea. "Unfortunately, there's no deduction for homeschooling expenses, at least not at the federal level," Logan Allec, a CPA and founder of personal finance site Money Done Right, tells Romper in an email. "However, there are some states that give tax breaks for homeschooling expenses." The cost of homeschooling your kid varies across families and regions, but at least these states may offer you a little recognition for the expense.
Which states offer tax breaks for homeschooling expenses?
"There are a handful of states that offer credits or deductions like Illinois, Indiana, Louisiana, and Minnesota. I imagine more and more states will come on board with this trend since homeschooling rates are increasing," Barbara Schreihans, a Certified Tax Strategist with a Masters in Taxation and owner of Your Tax Coach, tells Romper. Here's an in-depth breakdown of the particular tax benefits offered in the four states, provided to Romper by Scott Hoppe, CPA, MST, DBA, Principal at accounting firm Why Blu:
- Illinois allows a credit for educational expenses for dependent students being homeschooled. The credit is worth a maximum of $500.
- Indiana allows a $1,000 deduction per homeschooled qualifying child.
- Louisiana allows a deduction to income for 50% of the actual qualified educational expenses paid for the home-schooling, limited to $5,000 per dependent.
- Minnesota provides the K-12 Education Credit. To qualify your child must be attending kindergarten through 12th grade at a qualifying homeschool. The amount of benefit varies based on household income.
If you live in one of these states, speak with a tax pro in your area to learn more about how the benefits can help you out for the 2020 tax year.
What about tutoring?
"Tutoring — in the normal sense — is only deductible at the federal level if it's specifically for a child with special needs," says Allec. "To qualify, the tutoring would have to be on a doctor's recommendation and would have to be done by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments." In addition, these tutoring expenses are actually considered a form of medical expense. Even if this doesn't apply to your family's situation, you might not be expected to foot the bill for all your kid's tutoring expenses. "There are, however, many ways to get help for paying for a tutor such as through non-profits, vouchers provided by the state, and microgrants from the federal government," says Schreihans. Although how much you should pay for a tutor varies so much by your kid's age and the subject matter, according to Romper, you can hopefully find some ways to help ease those costs.
Other ways to make your kids' education more affordable
Even if you don't qualify for homeschooling or tuition breaks, the tax pros have other advice to help parents save at tax time.
- 529 College Savings Account
These accounts aren't just for college anymore. "Tuition paid for K-12 education can be paid from a 529 college savings account without incurring tax or penalty. Originally 529 accounts were designated only for higher education, but now they can be used for private K-12 tuition," says Yoder.
- Coverdell ESA
Your kid isn't anywhere near retirement age yet, but you can use something similar to a popular retirement plant to help pay for their schooling. "The Coverdell ESA (Education Savings Account) . . . is basically like a Roth IRA for education: you don't get a deduction when you contribute money into the account, but your balance grows tax-free and can be withdrawn tax-free if the distributions are used to pay for educational expenses," says Allec.
- Child and Dependent Care credit
"Also, be sure to keep track of your childcare expenses since they may qualify you for the Child and Dependent Care credit. Also be sure to get your childcare center's EIN sooner rather than later since you'll need it to claim this credit on your 2020 taxes," says Allec.
Whether you're able to deduct homeschooling and tutoring expenses in your 2020 taxes or not, there's still many other ways parents can use savings accounts and credits to help pay for your kid's childcare and education.
Scott Hoppe, CPA, MST, DBA, Principal at accounting firm Why Blu