I am frequently, “Are there any tax breaks for homeschooling parents?” My usual reply is, “No; there are no tax credits or deductions for homeschool expenses at the federal level.” There are tax breaks offered by some states that I discuss in another blog post.
But here’s a bit of a new twist on the question from a homeschool mother.
I spoke with an IRS representative just today about an educator’s expense tax break.The IRS rep stated that IRS laws specifically prohibit homeschoolers from getting up to $250 credit for educational items purchased. However, he stated congressional law overrides IRS law and that congressional law requires teachers work in a school as defined by state law. In our home state, Kentucky, we are considered private schools. The IRS rep suggested I give the credit a go next year but be prepared for an audit. Can you shed some light on the situation?
She is referring to the Educators Expense deduction of up to $250 in unreimbursed expenses.
The IRS guidelines say to be an eligible educator:
“You work at least 900 hours a school year in a school that provides elementary or secondary education, as determined under state law.”
To work means to get paid (to the IRS, not to all of us SAHMs!). Homeschool parents are not employees of a school. We do not get paid; we do not get a W-2. I attended a tax workshop where we were told that the IRS will check for a W-2 from a school if a taxpayer takes the Educator Expense deduction. Homeschoolers would not have a W-2 from a school, even if your state classifies your homeschool as a private school.
The intention of the tax deduction was to move the deduction from the Schedule A (Itemized deductions) Miscellaneous Deductions where it was subject to a 2% of Adjusted Gross Income limit (meaning anything over 2% of your AGI could be deducted) and put the deduction on the front page of the 1040, so even teachers who don’t itemize deductions can take advantage of the $250 deduction.
So in short, do not take the Educators Expense deduction. The IRS rep was right, be prepared for an audit. But without a W-2 from a school, you won’t win.
Carol Topp, CPA
P.S. Here are my required “lawyer” words:
Internal Revenue Service Circular 230 Disclosure: Advice relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any transaction or matter addressed herein.