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

 

“Incorporate yourself and write off homeschool expenses.” Really?

TaxAdviceLetters

 

Hello. I’ve been doing some research lately on how best to write of homeschool expenses in the state of Florida and came across your website. I’m hoping that you can assist me.

I’ve contacted my accountant who was able to confirm that the only way to write off homeschool expenses in Florida is to incorporate yourself.

If I go through that process, is there a site or a list of what I will be able to write off? Is it 100% of costs like curriculum and field trips? I’ve also heard that I can write off mileage related to homeschool events and even a portion of my mortgage.

I haven’t been able to find a good list anywhere that will tell me what steps I need to take and what advantages I will have once I take those steps.

Can you help or direct me to a good site that can help me?

Thank you so much for your time.

Becky C in FL

Becky,

To “incorporate yourself” you need a legitimate trade or business with a source of revenue (i.e. sales of a product or service). Paying yourself for homeschooling your own children does not count as a trade or business or revenue, so you cannot legally form a corporation.

Even if you do somehow form a corporation without revenue, your homeschool expenses are personal expenses and cannot be deducted on your corporate income tax return.

The advice you received from the accountant you found was incorrect.

Carol Topp, CPA