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Helping Reduce the Financial Burdens of K-12 Education: Iowa Tuition and Textbook Tax Credit

By Eric Fischer, a law clerk in Nyemaster Goode's summer program

The Iowa Tuition and Textbook Tax Credit is an income tax credit for eligible education expenses incurred for dependent K-12 students. Dependent children must have attended a school in Iowa that is accredited and is not operated for profit. The tax credit is an easy way for Iowans to reduce their tax burdens by keeping track of and reporting expenses they already pay. The credit is for 25% of eligible expenses, and is worth up to $250 per dependent child. To claim the tax credit, taxpayers must keep invoices for all eligible expenses.

The Iowa Tuition and Textbook Tax Credit is available for students who attend both public and private schools and covers expenses paid for “tuition and textbooks.” For purposes of the credit, “tuition” includes, “any charges for the expense of personnel, buildings, equipment, and materials other than textbooks, and other expenses that relate to the teaching of only those subjects legally and commonly taught in Iowa's public elementary and secondary schools.”  “Textbooks” are defined as “books and other instructional materials used in teaching those same subjects. This includes fees, books, and materials for extracurricular activities.” Extracurricular activities include participating in or attending sporting events, music or dramatic events, and driver education (if paid to the K-12 school). Even the cost of school dances (not including clothing) is allowed under the tax credit. Eligible expenses also include: computers if required as a condition for attendance, the rental of a musical instrument and sports uniforms, and special clothing or dramatic costumes that are not suitable for everyday wear.

A number of restrictions exist that Iowa taxpayers need to be aware of when using the Iowa Tuition and Textbook Tax Credit. The credit is nonrefundable and therefore cannot reduce Iowa tax liability below $0. In the case of divorced parents, only the parent who claims the child as a dependent may claim the credit, and such parent may only use the expenses that he or she actually paid. The cost of a pre-school program is not eligible for the tax credit, although it is eligible for a different credit, the Early Childhood Development Tax Credit.  Expenses related to home schooling do not qualify for the credit. Notable expenditures that are not eligible for the credit include: clothing or shoes suitable for everyday wear; travel, food or lodging expenses associated with education; specialty testing like the SAT, ACT or PSAT; amounts paid if they relate to the teaching of religious tenets or doctrine; and the purchase of musical instruments or private lessons.



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