Minnesota offers education tax break, so keep those school-supply receipts
Bill Salisbury, Pioneer Press, August 7, 2013 – If you are doing back-to-school shopping, the Minnesota Department of Revenue reminds you to keep your receipts. You could use them for tax breaks on your 2013 state income tax returns.
Those tax benefits are expected to save Minnesota parents nearly $33 million next year.
But a lot of taxpayers are missing out on the tax savings because they don’t know about them, Assistant Revenue Commissioner Terri Steenblock said Tuesday.
At a recent state-sponsored financial literacy program for adults, Steenblock said, “I was surprised that every parent I talked to didn’t know they could save their receipts for things that qualified” for the tax breaks.
The department doesn’t know how many eligible taxpayers fail to apply for the benefits. Some 279,000 families claimed school-expense tax breaks in 2011, according to the Revenue Department.
The state offers tax breaks for school-related expenses for kindergarten through 12th grade students attending public, private or home schools.
Qualifying expenses include textbooks, paper, pens, notebooks, calculators, computer hardware and software, tutoring fees and music lessons.
Minnesota offers two tax options: a refundable K-12 education credit and a K-12 education subtraction. Both reduce how much income tax parents must pay and can increase refunds.
The credit is intended for lower-income families, and it’s a better deal. The credit reimburses taxpayers for up to 75 percent of their school expenses. The subtractions reduce taxable income, covering a smaller portion of expenses.
To qualify for the credit, a family’s taxable income must be below certain limits — for example, $37,500 for a household with one or two K-12 children. Income limits increase by $2,000 for each additional child. The credit is limited to $1,000 per child.
Even taxpayers who aren’t required to file income tax returns can claim a refund for the credit.
In 2011, 57,000 families claimed the education credit, the department reported. The average credit was $273.
More taxpayers — 222,000 filers — claimed the school-expense subtraction in 2011, the department said.
Parents can claim a subtraction of $1,625 for each child in kindergarten through sixth grade and $2,500 for each student in grades seven through 12.
The subtraction has been available since 1955, and the credit has been on the books since 1998. But Steenblock said it’s obvious that many parents aren’t aware of the tax breaks, and that’s why the department is stepping up its public information efforts.
Why does the state provide the tax breaks? “They help parents provide their kids with the tools they need to get a good education,” Steenblock said.
During the Minnesota State Fair, the department will provide special envelopes for school supply receipts at its booth in the Education Building.