Here’s one way to make use of your children’s elementary and high school educations. Minnesota taxpayers with children often will be able to lower their state income taxes by deducting various school-related expenses.
In fact, some families qualify for the most powerful breaks – refundable tax credits, which offset taxes on a dollar-for-dollar basis. Many families with too much income for a tax credit still can take advantage of a “subtraction,” which reduces taxable income on the return.
Which schooling expenses are eligible? Expenses required by public schools and personal supplies (pens, pencils, rulers, etc.) necessary for classes generally qualify for a tax break. Private school tuition is eligible for the subtraction; some expenses of tutoring and home-schooling also can be claimed for at least one of the two tax-saving measures.
Most non-academic activities are excluded, but there are some important exceptions to that rule. For example, while athletics are out, music lessons from a “qualified instructor,” are eligible. The state Department of Revenue recently listed some common errors in claiming educational tax cuts. These expenses are not eligible:
• Fees for athletic programs.
• School uniforms of any type, including graduation gowns. (But gym clothes required for physical education classes are an exception and are eligible.)
• PSAT, ACT, and SAT testing fees
• More than $200 in spending for computer hardware and/or software.
• Costs of recreational programs including those run by the Boy Scouts and Girl Scouts.
Fortunately, the Minnesota DOR spells out the many ins-and-outs in the “K-12 Education Subtraction and Credit” fact sheet. Look for Income Tax Fact Sheet 8, available at the DOR Web site, www.revenue.state.mn.us. The Web site also offers a page describing “Qualifying Expenses for the K-12 Education Credit and Subtraction.”
If you elect the education credit, you’ll be dealing with Schedule M1ED, which involves income limits. If you choose the subtraction, you’ll take it on Schedule M1M. Both forms feed into the M1 tax return for individuals.
We also can help. EricJohn Ltd. is equipped to wade through the technicalities of Minnesota’s tax breaks for education!