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The Educator Expense deduction is a tax break, which is beneficial to whom the U.S. government classifies as “eligible.”
This tax break is located on line 23 of any IRS 1040 form. However, under U.S. tax law, teachers and other “eligible educators” are the only parties that can use this deduction to their advantage.
The term “eligible educator” is defined in Article 26 of the U.S. Internal Revenue Code § 62 as follows:
“For purposes of subsection (a)(2)(D), the term ‘eligible educator’ means, with respect to any taxable year, an individual who is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.”
A sizable percentage of formally-educated homeschooling have every bit of the qualifications that a public school teacher with average experience has. Yet and still, stipulations exist because homeschooling is considered private.
Since home-based educating is considered private school under federal law, homeschooling parents are not eligible for tax deductions. Nonetheless, states reserve the individual right to offer deductions as they see fit.
The U.S. federal government also prohibits homeschooling parents from spending specified monies on expenses geared toward their children’s education.
For an example, homeschooling parents cannot use money from a 529 Plan to fund their child’s household education. Why? It is because money from a 529 Plan is a tax-favored “Qualified Tuition Program” under the law.
Notwithstanding, there is a silver lining for parents who are providing a household education for their children: Homeschooling blended with entrepreneurship.
Tax breaks do exist for business owners with LLCs (Limited Liability Corporations).
The money that a homeschooling parent can save from lower tax rates by running a business of their own (as opposed to being a highly taxed earned income worker) can be used to fund their child’s education expenses.
Contact a certified tax professional for more information about the tax deductions for educators and entrepreneurs in your state.