Income Reduction for Indiana Homeschoolers
In September of 2011, Indiana enacted code IC 6-3-2-22, retroactively effective to January 1, 2011. For 2011 and in each subsequent year to date, Indiana taxpayers with a child or children enrolled in private or home school may qualify for a reduction in taxable income. This reduction in taxable income is at the rate of $1,000 per qualified student. With a state tax rate presently at 3.4%, that equates to $34.00 less in state tax per qualified student. Local tax reductions may apply, and will vary by locality.
The Indiana Department of Revenue’s Tax Talk Blog dated August 18, 2014, tells us “You may qualify for a deduction based on education expenditures paid for each dependent child enrolled in a K-12 private school or those homeschooled. Expenditures include tuition, fees, textbooks and even school supplies. If eligible, the deduction is $1,000 per qualified dependent.” The complete text of Indiana Department of Revenue’s published information about the deduction (reduction in taxable income) can be found in Information Bulletin 107, and the corresponding Indiana Code can be found in IC 6-3-2-22 near the bottom of the page. Consult your legal or tax professional to assist you in understanding this deduction, and the record-keeping requirements that may exist to substantiate it.
Once you have ensured you qualify for the deduction, claiming the deduction is quite simple. In any of the software programs available for preparing your taxes, it is a simple election to claim the deduction code number 626 for private or home schooling, and then enter the number of qualifying students. See a sample of the deduction below, with highlighted information completed for one qualifying student. The data is found on line 11 of Schedule 2 of form IT-40 in the format indicated below, which flows through to line 4 on page 1 of form IT-40 along with any other deductions in income.
11. Other Deductions: See instructions (attach additional sheets if necessary)
a. Enter deduction name PRIVATE SCHOOL code no. 626 11a 1000.00
It is my hope that this article helps to point you in the direction of the proper information to understand whether you can claim the deduction in taxable income for parents/guardians of Indiana students. This article is not intended as legal or tax advice. Please seek the counsel of a professional familiar with your individual tax or legal situation to assist you in making your decision.
Shelly Neal, MBA
AG Professional Services
NOTE FROM IAHE: We believe families need to make an informed decision related to taking the Indiana tax deduction or any other proposed tax credits relating to educational choices. Find out the differences between tax credits and tax deductions HERE or HERE.
You can also read HSLDA’s opinion.