Can you set up homeschooling as a business and get tax deductions?

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Hi Carol,

I have been involved in financial planning for 25 years and own my business. My question is concerning tax deductions that could be available for homeschooling. What are some of the possibilities?

I would assume that a person could set up a home school as a business but that would involve certain steps; what are they?  Would tax deductions be allowed if the business was not profitable or only set up to teach their own children?  Can expenses for things like mileage, activities, food, lodging or associated training expenses count as a deduction?
Thank you.

Jim B

 

Jim,

I have been asked questions similar to yours several times.

Here’s a blog post discussing tax deductions for homeschooling expenses:
http://homeschoolcpa.com/any-tax-breaks-for-homeschoolers/

Some homeschool groups (not individual families) set up a nonprofit organization and receive 501(c)(3) or 510(c)(7) tax exempt status from the IRS. But tax exempt status is only available to an organization, not to individual families.

Tax deductions are not allowed for expenses of teaching your own children. They are considered personal expenses, like food or clothing.

You would not be successful in setting up a business to homeschool your own children because you do not have  a trade; you would have no paying customers. There would be no revenue and the IRS would disallow the expenses because they are  personal expenses, not legitimate business deductions.

So, sorry Jim, but your assumptions were wrong.

Carol Topp, CPA
HomeschoolCPA.com

 

Comments

  1. Chris says:

    Thanks for this blog.

    I have a small business that makes a profit. If my business sponsors a scholarship (i.e. pays for the homeschooling expenses of my own children), would my business be able to deduct those expenses?

    Chris

  2. Carol Topp says:

    Chris,
    The short answer is no, you cannot.
    Your children’s educational expenses are personal expenses, not business expenses, and cannot be deducted from your business income.
    Donations to a legitimate scholarship fund with 501c3 tax exempt status can be deducted as charitable donations on your itemized deductions (Form 1040 Schedule A), but not as business deductions.
    Your personal scholarship fund for your own children is not a 501c3 charity, so it is not tax deductible as charitable donations nor are deductible as a business expense.

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