Potential Tax Benefits for Minnesota School Supply Purchases

Back-to-school shopping is a task that is often dreaded by students and parents alike. While it's hard for kids to shake off that end-of-summer blues, Minnesota parents can be comforted by the potential tax benefits available if they save the receipts from purchasing school supplies. These benefits include the K-12 Education Credit, which has income limit stipulations, and the K-12 Subtraction, which does not have any income limits. The credit or subtraction can apply for educational services or materials purchased for kindergarten through 12^th grade students in the 2015 tax year, and can allow for a larger refund on a 2015 Minnesota Income Tax return.

Eligible Items and Services

Applicable materials include notebooks/paper and pens, textbooks, and educational equipment rentals/purchases such as musical instruments or computer hardware/educational software. Educational services that may apply include tutoring, instructional fees for field trips taken during the normal school day, and after school or summer enrichment programs-provided these programs are taught by a qualified instructor. Some examples of non-qualifying expenses include school lunches, uniforms or school clothing, backpacks, participation fees for extracurricular activities, and testing fees for exams such as the SAT and ACT.

Qualifications

To qualify for the K-12 Education Credit, the maximum household income threshold depends on how many children are in the household: For one or two qualifying children, (that is, children in kindergarten through 12^th grade) the maximum household income is $37,500. To calculate this threshold for households with more than two qualifying children, an additional $2,000 should be added for each qualifying child. For example, three qualifying children would put the maximum household income at $39,500; four children would be $41,500, and so on.

The K-12 Subtraction has no household income limit; however, the qualifying child must attend a school that is located in either Iowa, Minnesota, North Dakota, South Dakota, or Wisconsin. The subtraction itself is limited to $1,625 per qualifying child in grades K-6, and $2,500 per qualifying child in grades 7-12.

Well-Used Credits

Last year, more than 53,000 families took advantage of the Minnesota K-12 Education Credit, and more than 219,000 families utilized the K-12 Education Subtraction. For more information on these credits, visit the Minnesota Department of Revenue website. If you have questions about qualifying or applying for these benefits, please contact your Eide Bailly professional or a member of our state and local tax team.