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Just the FAQs – Tuition Tax Credits and Tax Deductions

2011 was considered the year of school choice. At the start of 2011, there were 20 publicly funded private school choice programs taking place in 12 states and Washington, DC. By the end of that year, seven new programs were added and 11 existing programs were expanded. These new and expanded programs allow for more students to benefit from tax-credit scholarships. In 2011, 28,792 students, throughout the nation, were receiving tax-credit scholarships amounting to $343,043,947. Indiana, North Carolina, and Oklahoma are the three most recent states to pass tax-credit legislation. Forty-one states have introduced school choice legislation over the last year and a half (including vouchers).

The following are answers to frequently asked questions (FAQs) regarding tuition tax credit and tax deduction programs. The answers to these FAQs are intended to provide only an introductory overview of key issues.

What Are Tuition Tax Credits and Tax Deductions?

School tax credits refund expenses made toward education up to a fixed figure, while tax deductions minimize the expense of education by making them itemized deductions. The qualifying criteria cover educational expenses such as tutoring, texts, and computers; in the states that have them so far, they also cover private school tuition. State legislation determines the amount of credit and what can be included in the deductions. It also states whether private school tuition qualifies.

Education tax programs fall into one of two categories. The first is a personal use credit, which allows individual families to reduce their tax liability. The second category is a donation tax credit, which allows individuals and businesses to reduce their tax liability by contributing to organizations that disperse funds to families to help them pay for their children’s education.

Won’t These Programs Only Benefit the Wealthy?

No, in fact, the opposite is true. Because donation tax credits create a pool of funds

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