Iowa Tax Credits Can Help Parents
AMES, Iowa – Many Iowa families understand the high cost of putting a child through driver’s education during the school year or over summer break. What many families don’t know is the Iowa Income Tax Return includes a credit for eligible expenses for K-12 students, expenses that may include driver’s education.
“We want families to be aware of this tax credit, because expenses for school can become costly,” said Barbara Wollan, Iowa State University Extension and Outreach family finance program specialist.
Iowa tax law includes two tax credits to help families with pre-school and school-aged children: the Iowa Tuition and Textbook Credit and the Early Childhood Development Credit.
Parents whose children attend grades K -12 at an accredited Iowa school can claim the Iowa Tuition and Textbook Credit. The credit is available to anyone in any income bracket. The child must be claimed by the parent as a dependent on his or her tax return and only expenses paid by the parent can be used to calculate the credit. Eligible expenses include required supplies or fees for classes and also some required expenses for school-sponsored extra curricular activities.
The Early Childhood Development Credit is available to parents of children age 3 -5 if they do not pay for child care. The credit is available to families or individuals with net incomes under $45,000.
Both credits can result in a maximum tax reduction of $250 per dependent. Iowa residents can report up to $1,000 of expenses per child. The amount reported is multiplied by 25 percent to arrive at the credit, said Joyce Lash, also an ISU Extension and Outreach family finance program specialist.
“Relatively few taxpayers receive a $250 credit since most children do not incur $1,000 of qualifying expenses,” said Wollan. “But if a family has three children and spends $40 on each child for eligible fees or supplies, the resulting credit provides an extra $30 toward that family’s goals.”
For more information on items eligible for credit, visit http://www.extension.iastate.edu/story/news/familytaxcredits.htm.