Tax credits for Iowa homeschooling families?
Thanks to the efforts of Homeschool Iowa, in partnership with an Iowa Legislature and Governor willing to tackle significant education reform, this is now a reality!
Giving Credit Where Credit Is (Over)due
Since 1987, Iowa has allowed a “Tuition and Textbook Credit” for certain school-related expenses incurred by parents for their children’s education.
Located in Iowa Code Section 422.12(2), the credit has been 25% of up to $1,000 in eligible expenses for each K-12 dependent.
However, the law limited the credit to those with dependents enrolled in an accredited public or private school.
Parents of homeschooled students (or nonaccredited private school students) were not allowed access to this tax credit option.
If homeschooling parents incurred the same types of expenses—or even the exact same expenses—as other parents, they were not allowed the same tax credit as their neighbors.
At Last, Equal Access Becomes a Reality
After many long years, and more than one stalled effort to end the discrimination against homeschool parents on this issue, equality has been achieved.
On May 20, 2021, Governor Reynolds signed into law HF 847, ushering in tax credits for Iowa homeschooling families.
Now parents providing private instruction
may also claim
the Tuition and Textbook Credit
for qualifying expenses
incurred for a dependent.
And the new access includes the 2021 tax year.
But there’s more!
In addition to ending the discrimination against homeschool parents for the Tuition and Textbook Credit, Governor Reynolds also proposed a higher cap on the qualifying expenses. The Legislature agreed.
Starting in 2021, the credit may be taken for 25% of up to $2,000 in qualifying expenses, effectively doubling the credit for each dependent.
So what qualifies for this tax credit?
The definitions are broader than one might think.
The Iowa Department of Revenue has information on its website to give parents guidance.
However, it’s important to understand that the updated 2021 Form 1040 instructions are not yet available.
Even so, the instruction page for line 44 of the 2020 Iowa Form 1040 can provide helpful information. It can be found here.
Because this document was produced before the 2021 legislative changes, you’ll notice several out-of-date items. Here is a brief list of a few of them.
- It says homeschooling is not qualified, which is no longer accurate.
- It references the $1,000 cap, which has now been replaced with a $2,000 maximum.
- It doesn’t acknowledge parent-taught driver education expenses, even though that option is now available to all Iowa parents.
Remember, these instructions were written for the 2020 tax year.
The Department of Revenue is still working on updated guidelines and has not yet published them.
What’s a homeschooling taxpayer to do?
Homeschool Iowa cannot give legal or tax advice, of course, but, as a homeschooling father, I don’t mind sharing with you what I plan to do.
If I have an expense that would qualify for the credit if my dependent was enrolled in an accredited school, then I will plan on claiming the Tuition and Textbook Credit for it.
The barrier of required accredited school attendance has been removed.
So if the currently published list includes an expense was legitimate for a dependent in an accredited school, it should be legitimate for me, too.
Here are just two possible examples:
- Textbooks and Publications
Textbooks and other instructional materials used in teaching subjects legally and commonly taught in Iowa’s public elementary and secondary schools, including those needed for extracurricular activities; computers, if required.
- Required Materials and Supplies Other Than Textbooks
Spiral notebooks, pens, pencils, rulers, calculators, flash drives and other items on a required supply list issued by the dependent’s school.
This guidance might not be as solid as many would like, I know. Even so, it is the best we can do at this time and given the circumstances.
I anticipate that there will be clearer guidance when the time comes to file the 2021 tax returns upon which the credit can be claimed.
We will continue to update this page when new information is provided on tax credits for Iowa homeschooling families.