Back to School Credits and Deductions

August 23, 2017

Students in line holding school suppliesNext to the holidays, back-to-school time can be the most expensive season for many Hoosier families. Luckily, Indiana offers a few education related deductions and credits to put money back in your pocket.

Education Expenses Deduction – You may qualify for a deduction based on education expenditures paid for each dependent child enrolled in a K-12 private school or homeschool. Expenditures include tuition, fees, textbooks and even school supplies (but not computers). If eligible, the deduction is $1,000 per qualified dependent. Read Information Bulletin #107 for the details.

School Scholarship Tax Credit – When you contribute to a qualified scholarship granting organization, the money provides K-12 scholarships for Hoosier children. A contribution can net a 50 percent credit against your state tax liability. There are no limits on the size of a qualifying contribution, but the entire tax credit program has a limit of $9.5 million in credits for FY2017. This contribution may also qualify as an itemized deduction on your federal tax return. Visit http://www.doe.in.gov/choice/school-scholarships for more information.

Indiana CollegeChoice 529 Investment Plan Tax Credit – When you contribute to a CollegeChoice 529 education savings plan, you get a 20-percent state credit (up to $1,000) for contributions made this year. You don’t have to be a family member to contribute. Visit the Indiana Education Savings Authority site and read their tax credit FAQ for details.

Tax Credit for College Donations – With this credit, you may get a state credit and a deduction on your federal tax return. Making a contribution to support your Indiana college of choice could net you up to a $100 (if filing singly) or $200 (if married filing jointly) credit when you file your state tax return. Contributions can include cash and other stuff – like a rare book, artwork or land. You’ll get a bigger bang for your buck if you itemize deductions on your federal tax return. Be sure to keep your receipt/letter from the institution. Read Information Bulletin #14 for state credit details and get more information about claiming itemized deductions from the IRS.

To qualify for these credits/deductions when filing your 2017 Indiana individual income tax return (in 2018) make your contributions and/or payments between now and Dec. 31.