By State Rep. Sondra Erickson
Summer vacation is nearing an end, so many families are bracing for another round of back-to-school shopping. Parents need to remember to save receipts because some school-related purchases made before the end of the year may be eligible for state tax credits or tax subtractions on 2005 Minnesota income tax forms.
Under Minnesota=s education tax credit/subtraction program, families with children in grades K-12 and with incomes under $37,500 are eligible for a tax credit of up to $1,000 per child. This year, the family cap was lifted so that larger families can claim more tax savings for school-related purchases.
Up to 75 percent of the money you spend on eligible purchases will be refunded to you when you file your taxes. Families can use tax credits for tutoring, enrichment programs, textbooks, academic camps, instructional materials and expenses associated with individual schools, and home computer hardware and educational software up to $200. The credit is also applicable to the purchase of a musical instrument, calculator or other life-long piece of equipment that your child uses at school. The credit is not applicable for tuition expenses at a private or parochial school.
All families with children in K-12 school -- regardless of income -- can claim state tax subtractions for the same education-related expenses listed above, including tuition. A subtraction lowers a family=s taxable income. Subtraction limits are $1,625 for a child in kindergarten through 6th grade and $2,500 for a child in grades 7 through 12.
Parents, keep in mind that you can’t claim the tax break for back-to-school clothes and athletic gear. But what many taxpayers don=t realize is that you don=t have to itemize your federal taxes to claim the subtractions. This is one of the most overlooked and underutilized Minnesota tax breaks. Any family filing a Minnesota income tax form can take advantage of these education-related tax reductions, so keep receipts and save a little more of what you earn.
For more information about education tax credits and subtractions, you can check with the Minnesota Department of Revenue online at www.taxes.state.mn.us.
Rep. Erickson is the state representative for House District 16A which includes all of Mille Lacs County and parts of Morrison, Benton and Sherburne Counties.