How Much Does Homeschool Cost?
By Sun Kyu Bae |
Published April 15, 2009 |
Articles |
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Find out if you can handle the financial burdens, also get the 411 on financial aid!
Financial Assistance
Alright, so you’ve received the lowdown on homeschool costs. Given that we’re embarking on a costly journey here, are there any forms of financial relief available for homeschoolers?
Since financial assistance comes in various forms, let us address this question by type of financial assistance: 1) Federal tax assistance, 2) financial aid, and 3) other.
Federal/State Tax Assistance: Income Tax Credits
Income tax credits act to reduce any amounts, dollar for dollar, that you owe in income taxes. For example, if I owed $100 in income taxes, a $30 income tax credit would reduce my tax bill from $100 to $70.
The good news is that income tax credits exist at both the Federal and State level, which theoretically means that we have 2 chances to take advantage of some savings in our tax bill, one on our Federal Income Tax Return and one on our State Income Tax Return.
The bad news is that income tax credits are currently slim pickens for most of us homeschoolers. Although there are two Federal tax credits available for higher education (i.e., postsecondary institution such as 4-year college, junior college, vocational school, etc), none are for homeschool families. And although at first this may seem like a bad thing, it’s not if you consider that every tax break these days seems to come with a set of strings attached (like regulation) – so it’s actually a good thing that there are no Federal income tax credits available at this time.
By the way, if you ever consider advocating for some sort of tax relief for homeschooling (Federal or State), I strongly recommend that you first think about the potential risk for introducing regulation over homeschooling in exchange for said tax breaks. I don’t know about you, but I value our freedom to homeschool over a tax break any day. So, ideally, I would advocate for tax credits without any government regulation. Ok – back to our topic.
At the state level, there are currently a handful of states that have income tax credits which home schoolers can benefit from. For example, in Illinois, expenses up to $500 relating to tuition and materials can offset any state income tax bill. The states that currently offer income tax credits are: 1) Iowa, 2) Arizona, 3) Minnesota, and 4) Illinois. Check out HSLDA's website for details.
The silver lining around tax credits is that proposing tax credits for education (including home schoolers) isn’t new, and there are several measures, depending on the state, that are currently being considered in those states. Federal income tax credits are also being considered for homeschoolers. The best thing about this is that Home School Defense Legal Association is proactively engaged in ensuring that regulations are left out the tax credit details.
Federal Tax Assistance: Coverdell Education Savings Accounts
These are savings accounts that can be established for parents saving money for their children’s education expenses, such as tuition, books, and supplies. The interest and principal in these accounts can be withdrawn tax-free. For 2008, the maximum contribution for each beneficiary (the child) was $2,000.
Unfortunately, the only homeschools that can take advantage of this assistance are those classified as private schools by your state. For example, homeschools in California and Texas can qualify for private school status (in California, you need to file an affidavit declaring your private school status while in Texas, no filing is required). Before you apply for a Coverdell account, please consult your state laws to determine whether your homeschool is considered a private school.
For folks that live in states that do not consider homeschools as private schools, there are a couple of bills proposed by Senator David Vitter (LA) in January 2009 which, if passed, would allow all home schools to be qualified to use the Coverdell accounts. But don’t hold your breath on the final outcome of this one since it typically takes bills months (even years) to get passed into a law.
For more details on Coverdell accounts, go here and here.
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