If you’re new to homeschooling, you might not realize that there are tax deductions available in Union City, NJ. While you should always consult a certified accountant before claiming any new deductions, you can take advantage of federal tax credits to cut down on your tax bill. They’re not specifically labeled as “homeschool tax deductions,” so you might miss out if you’re not looking closely. Here are some of the tax credits your family may be eligible for:
- Federal tax credits: Federal tax law allows you to deduct certain expenses from your tax bill. First, if you hire a tutor for special education or spend money on specialized instruction, be it books, classes or other expenses, you can deduct the cost from your tax bill. You may also deduct any charitable donations you make, so consider donating old materials or cash to your local homeschool nonprofit or library. Ask your accountant for advice about how to make sure you get the maximum credit for your donations—they’ll be able to advise you how, when and where to capitalize on charitable contributions.
- State tax credits: If you live in New Jersey, you’re out of luck on state tax credits. However, if you lived in Illinois, Minnesota or Louisiana last year, you might be eligible to claim state homeschool tax credits. The credits can help pay for classes, books, curricula materials and more. Ask your accountant for more information if you think you can claim these state tax credits.
- Child tax credit: You might know that you can deduct money from your taxes according to how many dependent children are in your household. This can cut a significant chunk from your overall tax bill: up to $2,000 per child, depending on your income. Parents are wise to take advantage of this credit for as long as possible—once your child is 17 or older, they’re no longer eligible for this tax credit.
- 529 tax-deferred savings plans: Is your kid college bound? If so, a tax-deferred 529 savings plan is a great way to set them up for the future while cutting down on your taxes. Any contributions you deposit into the account will grow over time—and it’s free of federal income tax. When it comes time for your child to attend college, they won’t have to pay any taxes to withdraw money.
While there aren’t many deductions to take if you homeschool in Union City, NJ, a savvy accountant can help you determine the best way to cut down your overall tax bill. They can also help you make wise decisions for your future tax implications, whether that’s setting up a 529 or taking advantage of other applicable deductions and credits. Talk to your accountant about how to get the best deal possible when dealing with the IRS.
The accountants at Kedean’s Generation are standing by to answer your questions about homeschooling and taxes. Call us today to schedule an appointment and find out how you can save on your taxes this year.
Categorised in: Tax Consultant