Educational Tax Breaks and Deadlines: The Tax Letter

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Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…

Teachers' tax deduction deadline
Teachers have three more weeks to max out a federal tax deduction for 2023. They can deduct up to $300 for the cost of their unreimbursed expenses. Teachers don’t have to itemize to claim this write-off. It is an above-the-line deduction claimed on Form 1040, Schedule 1, line 11.

The cap is $600 for spouses who are both teachers and file jointly. Homeschooling parents don’t get the break. It’s only for K-12 educators who work 900-plus hours during a school year in an elementary or secondary school. The deduction for 2024 is also limited to $300.

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Tax breaks to expand K-12 school choice
Many Republican lawmakers want to expand school choice for K-12 students. Providing tax breaks might be one way to achieve this goal. For example, a Republican-backed House bill would give nonrefundable tax credits to individuals and corporations that donate cash to qualifying organizations set up for the purpose of providing scholarships for elementary and secondary education.

The credit would be capped for individuals at the greater of 10% of adjusted gross income or $5,000, with any excess amount carried forward for five years. The credit cap for corporations is 5% of taxable income.

Nearly half the states already have tax credit scholarship programs, which give taxpayers credits to offset state taxes for donating to participating groups that endow scholarships to attend private school for primary and secondary education.

In 2020, the Supreme Court ruled that a state tax credit scholarship program can be used for religious schools education. The case addressed a scholarship program created by the state of Montana to help children attend private school. The state gave a tax credit to taxpayers who donated to organizations that participated in the program. Relying on the Montana constitution, which bas the funding of religious education by the state, the Montana Dept. of Revenue issued a rule that provided the scholarships cannot be used at religious schools in the state. In a closely divided opinion, the Supreme Court decided that the state's ban on religious schools participating in the program was unconstitutional.

This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to kiplinger.com and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.