As your local expert bookkeepers who are well-versed in Minnesota tax regulations, we are excited to share some valuable insights about how you can make the most of your back-to-school shopping and save on taxes.
Back-to-school season isn’t just about getting your kids ready for the classroom; it’s also an opportunity to save on your tax bill.
The Minnesota Department of Revenue has some essential tips and advice to help you navigate the K-12 education tax benefits effectively.
1. Save Those Receipts for Valuable Tax Benefits
The Minnesota Department of Revenue wants to remind all parents and caregivers about the importance of keeping your school supply purchase receipts. These receipts can make a significant difference when it comes to filing your taxes next year. By doing so, you can claim two essential tax benefits: the refundable K-12 Education Credit (income limits apply) and the K-12 Education Subtraction (no income limits).
2. Expanded Access to Tax Credits
Great news! Thanks to recent changes in legislation, over 31,000 additional Minnesota families are now eligible to claim these tax credits this year. This means more families can benefit from financial relief during this back-to-school season.
3. Know Your Tax Benefits
Minnesota families have two primary tax benefits to aid in educational expenses for their children: the refundable K-12 Education Credit and the K-12 Education Subtraction. The K-12 Education Credit has specific income limits, while the K-12 Education Subtraction is available to most parents without any income restrictions.
4. Qualifying Educational Expenses
Qualifying expenses cover a wide range of educational supplies and services, including:
- Paper
- Pens and notebooks
- Textbooks
- Rental or purchases of educational equipment (e.g., musical instruments)
- Computer hardware and educational software (up to $200 for both the subtraction and credit)*
- After-school tutoring and educational summer camps taught by qualified instructors
*Note: Internet service fees do not qualify.
5. Income Limits for K-12 Education Credit
For the K-12 Education Credit, the income limits are as follows:
- 1 or 2 qualifying children in K-12: Household income must be less than $76,000
- 3 qualifying children: Household income must be less than $79,000
- More than 3 qualifying children: Household income must be $79,000 plus $3,000 for each additional child
6. Claiming the K-12 Education Subtraction
The K-12 Education Subtraction has no income limits, making it accessible to most parents. It can be claimed for tuition paid to private schools or college courses used to meet high school graduation requirements.
7. Resources to Help You Understand
If you’d like to learn more about the K-12 education tax benefits, you can watch the informative video here: https://www.youtube.com/watch?v=mQ1ZtZdV-JM&feature=youtu.be
provided by the Minnesota Department of Revenue
As you gear up for back-to-school shopping, remember that being well-informed about these tax benefits can put extra money back in your pocket.
Save those receipts, explore the qualifying expenses, and consider how these benefits can make a positive impact on your financial planning. If you have any questions or need assistance in optimizing your tax strategy, don’t hesitate to reach out to me, your local expert bookkeeper.
Here’s to a successful back-to-school season and smarter financial planning!
When it comes time to get your taxes together, let’s make sure those receipts are all calculated and included with any/all other write-offs you might have for tax time.
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