Homeschooling Parents Can Use Education Savings Accounts in Some States
By Mimi Rothschild
In the past, there were quite a few regulations on Education Savings Accounts, then called education IRAs. It wasn’t just homeschoolers that could not utilize the benefits of these savings accounts. None of the money invested in these accounts could be applied to any expenses, education or otherwise, outside of higher education. Annual contributions were limited to $500 for each child.
Things are changing! Though current circumstances around Education Savings Accounts are far from ideal for homeschoolers across the country, at least there have been steps in the right direction.
Ever since 2001, in fact, things have been moving in the right direction, though some homeschool families think they aren’t moving far enough or fast enough. It was then that the President signed Public Law 107-16 (PL 107-16) into being after Congress passed the Economic Growth and Tax Relief Reconciliation Act (H.R. 1836). This meant a lot of changes when it came to taxes and finances in general, but one of the tenets in particular affected homeschool families, and that was the improvements to the education IRAs.
Aside from changing the name to Education Savings Accounts, the rules were changed significantly as well. For example, the most that parents can contribute to the account each year for each child was raised from $500 to $2000. Also, it is now possible to spend the money in the education savings account on education expenses for children in kindergarten through grade 12 without penalties, instead of on higher education alone.
The new Education Savings Accounts affect homeschoolers’ expenses. Tuition costs, fees for tutors, the cost of books, and expenses for computer hardware and software, whether for public or private school, are now qualified expenses under the new laws. This means that in the states where homeschools are considered private schools, homeschool parents may now use their investments in Education Savings Accounts on homeschool costs.
Here’s where some homeschoolers have the problem: not all homeschoolers qualify. The only states that provide for homeschools to be classified as private schools are Alabama, California, Illinois, Indiana, Kentucky, Kansas, Louisiana, Michigan, North Carolina, Nebraska, Ohio, Tennessee, and Texas. Even in Colorado, Florida, Maine, West Virginia, and Utah, where groups of homeschools can be recognized as private institutions, each individual homeschool in the group is not recognized as such and therefore doesn’t qualify.
There is a growing movement to change these regulations so that homeschoolers in every state of the union can enjoy the benefits of Education Savings Accounts. Should you be involved?
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