Minnesota is not one of the 18 states with back-to-school sales tax holidays this year. But shoppers there still might be able to turn what they paid for school supplies into tax savings.
The North Star State offers two tax breaks for school-related expenses for kindergarten through 12th grade students who attend public, private or home schools.
The K-12 education subtraction works much like the federal adjustments to income, also known as above-the-line deductions.
It reduces the amount of income upon which a Minnesota taxpayer must calculate state tax due. The less income, generally the smaller the tax bill.
The K-12 education credit offers Minnesota filers a chance to directly reduce their tax bills dollar for dollar because it is claimed after the tax due amount is figured.
Even better, the K-12 credit is refundable, meaning that qualifying Minnesota taxpayers could potentially get a refund if there still some credit left after it wipes out their tax bills.
Those tax benefits are expected to save Minnesota parents nearly $33 million next year. But the savings could be even more if all those who qualify claim the tax breaks.
Assistant Revenue Commissioner Terri Steenblock told PioneerPress.com that at a recent state-sponsored financial literacy program for adults, she "was surprised that every parent I talked to didn't know they could save their receipts for things that qualified" for the tax subtraction or credit.
Qualifying taxpayers: Both tax breaks are filed with the Minnesota Form M1, Individual Income Tax Return.
Every Minnesota taxpayer can claim the education subtraction as long as they buy eligible school-related supplies (more on this in a minute).
There are, however, income limits on who can apply for the state's education credit:
Number of qualifying
children in K-12:
Household income must be less than:
1 or 2
8 or more
for each additional child
Qualifying expenses: In general, expenses that qualify for either the subtraction or the credit include:
- Purchases of required materials and miscellaneous fees for use during the normal school day,
- Instructor fees and tuition for enrichment classes or instruction taken outside the normal school day or school year, provided the instructor is not the child's sibling, parent or grandparent, and
- Computer hardware and educational software.
Qualifying expenses that apply only for the subtraction include instructor fees and tuition for classes taken during the regular school day.
Minnesota Revenue's special Web page has details on the K-12 credit and subtraction.
Regardless of which Minnesota K-12 tax break you claim, be sure to hang onto your school-related receipts.
Minnesota Revenue says filers must have records to prove payment of the expenses. Acceptable documentation includes itemized cash register receipts, invoices and canceled checks.
You also might find these items of interest: