Educational Tax Breaks and Deadlines: The Tax Letter
Teachers have just a few more weeks to max out a tax deduction for 2023 and the GOP has some tax options if they want to expand school choice.
Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
Teachers' tax deduction deadline
Teachers have three more weeks to max out a federal tax deduction for 2023. They can deduct up to $300 for the cost of their unreimbursed expenses. Teachers don’t have to itemize to claim this write-off. It is an above-the-line deduction claimed on Form 1040, Schedule 1, line 11.
The cap is $600 for spouses who are both teachers and file jointly. Homeschooling parents don’t get the break. It’s only for K-12 educators who work 900-plus hours during a school year in an elementary or secondary school. The deduction for 2024 is also limited to $300.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tax breaks to expand K-12 school choice
Many Republican lawmakers want to expand school choice for K-12 students. Providing tax breaks might be one way to achieve this goal. For example, a Republican-backed House bill would give nonrefundable tax credits to individuals and corporations that donate cash to qualifying organizations set up for the purpose of providing scholarships for elementary and secondary education.
The credit would be capped for individuals at the greater of 10% of adjusted gross income or $5,000, with any excess amount carried forward for five years. The credit cap for corporations is 5% of taxable income.
Nearly half the states already have tax credit scholarship programs, which give taxpayers credits to offset state taxes for donating to participating groups that endow scholarships to attend private school for primary and secondary education.
In 2020, the Supreme Court ruled that a state tax credit scholarship program can be used for religious schools education. The case addressed a scholarship program created by the state of Montana to help children attend private school. The state gave a tax credit to taxpayers who donated to organizations that participated in the program. Relying on the Montana constitution, which bas the funding of religious education by the state, the Montana Dept. of Revenue issued a rule that provided the scholarships cannot be used at religious schools in the state. In a closely divided opinion, the Supreme Court decided that the state's ban on religious schools participating in the program was unconstitutional.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to kiplinger.com and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.
-
How to Help Your Kids Without Ruining Your Retirement
Here are some general considerations to ensure the gift of assets to your kids will not negatively affect your financial future.
By Mario Hernandez Published
-
AI to Power the Next Generation of Robots
The Kiplinger Letter There's increasing buzz that the tech behind ChatGPT will make future industrial and humanoid robots far more capable.
By John Miley Published
-
Knowing How to Compute Tax Basis in Your Home Can Save You Money
The Tax Letter Whether you're selling or buying a home, you'll want to know how to compute tax basis. It could save you on taxes when you sell.
By Joy Taylor Published
-
Tax Tips for Transferring Excess 529 Plan Funds to Roth IRAs: The Tax Letter
The Tax Letter 529 plans can help blunt the cost of paying for college. But if you want to use leftover funds there are some tax tips to bear in mind.
By Joy Taylor Published
-
Top 10 Tax Expenditures in 2024: The Tax Letter
The Tax Letter Costly tax breaks will likely come under scrutiny from lawmakers trying to reduce the national debt. We review the 10 largest individual tax expenditures.
By Joy Taylor Published
-
How to Report QCDs on Your Tax Return: The Tax Letter
The Tax Letter Qualified charitable distributions, otherwise known as QCDs, can be tricky when it comes to tax reporting. We've got some pointers to help with filing.
By Joy Taylor Published
-
What to Know About Medical Expenses and Your Tax Deductions: The Tax Letter
The Tax Letter What you need to know about deducting medical costs on your tax return.
By Joy Taylor Published
-
The Net Investment Income Tax is Broader Than You Think: The Tax Letter
The Tax Letter The 3.8% net investment income tax, which is added to the regular income tax, covers more than you might think.
By Joy Taylor Published
-
What to Know Before Splitting 401(k) Assets in a Divorce: The Tax Letter
The Tax Letter Splitting 401(k) assets in a divorce can lead to unintended tax consequences, there are ways to avoid financial penalties.
By Joy Taylor Published
-
Tax Tips for Filing Your 2023 Tax Return
Tax letter From filing early to electronic filing, these tax tips will help speed up the process of filing your 2023 tax return.
By Joy Taylor Published