Can the tax credit initiate regulation? Will I have to show proof of my homeschooling? No. The tax credit is not based on the method of education you choose, rather the supplies, curriculum, and resources you may need to get the education. No proof will be necessary for anyone participating. It will not bring any more regulation on your method of education than the child tax credit does to your parenting. In addition, we have included language that specifies that a tax credit in no way gives permission or reason for the DOE to regulate or put any type of restrictions or requirements on those who choose to participate.
Do I have to claim the credit on my taxes? No. It is totally a personal choice. If you choose not to claim the credit, you simply would not turn in any educational expenses on your taxes.
What is the difference between a tax credit and a deduction? Tax credits provide a dollar-for dollar reduction of your income tax liability. This means that a $1,000 tax creditsaves you $1,000 in taxes. On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket.
As you might imagine, having a tax credit is more valuable. A tax deduction is helpful, since it lowers your taxable income, but it isn't quite the same. Your deduction might not be enough to knock you down a tax bracket, and it simply reduces the amount of money your taxes are figured on.
Do I have to keep a record of all my expenses and turn in receipts? Yes and no. With any type of tax credit based on purchases, you should keep a record just so you know the total amount of expenditures to turn in to your accountant. You do not, however, have to turn in receipts to anyone. I would recommend you keep those receipts with your tax papers. It is no different than itemizing for deductions or a business keeping track of expenses. A total amount is all that is turned in while receipts are kept for proof.
Can a family with multiple children get more than a family with 1? I can’t really answer that one yet as we are still playing with the language. Currently, the language states that the credit is up to $2500 per family, but some legislators have requested that we change that to $500 per student with a cap of $2,500 per family. Either way, the max will be $2,500 per family.
Can a teacher use this for students in the classroom? No. This is for personal family educational expenses. IF, however, a teacher is also a parent of a student, they can claim the tax credit for their own children the same as any other parent.
Can private school uniforms be included? Yes. If they are required, any school uniform can be included as a qualified expense.
Can this be used to pay for a homeschool coop fee or other tutoring expenses? Yes.
Will this help me get a tax refund? No. A non-refundable tax credit is a dollar-for-dollar reduction in your tax liability. If, after figuring your taxes, you see that you have to pay $3,000 in taxes, and you qualified for $900 in educational expenses, then you would reduce your tax liability by $900 to $2,100. If your tax liability was only $800, then it can only reduce your tax liability to $0. Non-refundable tax credits cannot be used to create a tax refund.
What if I have more expenses than the allowable credit? The way this is written, any excess can be carried over, in order, to each of the two subsequent taxable years.
Can I also itemize these expenses as deductions? No. Amounts claimed under this tax credit cannot be itemized as deductions when computing Oklahoma taxable income.
Is this a Federal or State bill? This is strictly for your state taxes.
What supplies would I be able to count toward the credit? Anything that is specific for a purpose and required could be considered a qualified expense. For example (but not limited to) computers, graphing or specialized calculators, curriculum, specialized art supplies beyond crayons and markers, specialized paper such as graphing paper, specialized tools for classes such as carpentry or auto mechanics, etc...regardless of where they were purchased.
Will itemizing rather than taking a standard deduction make a difference in receiving this credit? You can use it whether you itemize or not. Deductions (whether standard or itemized) are used to calculate your taxable income, which then gives you your tax amount from a formula or table. This credit is then used to reduce your taxes owed after calculations are done.
How will they know we have children that qualify? Will we have to turn something in? No. Your children are already listed on your tax return with their SSN and birthdate. That is all the information that is necessary to show that you have children that fall within the school age qualifier. No other information will be required.