If your shopping cart is piled high with notebooks, pens and other school supplies in the next few weeks, save those cash register receipts – even after the charges have cleared your bank account. There’s a good chance you’ll be able to lower your state tax bill or a receive a bigger refund with them when you file your 2014 tax return.
Minnesota families with children attending grade schools and high schools, as well as home schools, can subtract costs of school supplies and other expenses from incomes on state tax returns.
Even better, some families with limited incomes can qualify for tax credits, the most powerful state tax breaks available. Credits offset state taxes on a dollar-for-dollar basis.
Most expenses directly related to schooling qualify for either a subtraction or a tax credit. For example, tutoring expenses and rental fees for instruments for music lessons are among the approved items. But non-academic expenses don’t qualify, even if they have a direct connection to the school. So, athletic gear and team uniforms – except for clothing required for gym classes – don’t make the cut. There is a $200 limit for computer hardware/ and software expenses, too.
Those receipts for educational expenses can produce a good-sized return of Minnesota taxes. Using the subtraction, parents can lower income as much as $1,625 or each grade school student and $2,500 per child for junior high and high school students. Taxpayers eligible for credits can reduce their taxes as much as 75 cents for every $1 spent on school supplies. They also can file for refunds even if they do not owe any taxes.
For a broad look at the education tax breaks, type “K-12” in the search box for the Minnesota Revenue Web site, www.revenue.state.mn.us. It leads to a specialized Web page about them.
How do you know which expenses will work and which won’t? Minnesota Revenue offers two fact sheets to help with those details. Look online for Income Tax Fact Sheet 8, called “K-12 Education Credit and Subtraction.” Eligible expenses for home schooling are spelled out in Income Tax Fact Sheet 8a.
If you’ll be visiting the Minnesota State Fair this month, you might want to stop in at the Minnesota Revenue booth in the EducationBuilding. The state tax people are offering a special envelope to help parents/guardians hold on to receipts from school supply shopping.
We at EricJohn Ltd. suggest another handy way to track those education expenses. Snap photos of receipts with a cellular phone and store them in an electronic folder for easy reference at tax time.