We are registered with the state of North Carolina as The York
Academy. We homeschool our only child and would like to know of the
tax deductions or any advantages for schooling at home.

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Request for Question Clarification by arlenegreen-ga on 07 Nov 2002 03:59 PST

Unless you incorporate as a non-profit you are probably not looking at
any kind of tax break. Or any kind of financial advantage to speak of.
What kind of monetary advantages are you thinking of specifically?

Hi LYork,

I just did some research on this subject for one
of my clients. This is what I have learned.

a)As a parent, regular schooling costs are not deductible. 
So, home schooling costs, from the parents of the student's 
point of the view, should not be deductible, either.
http//www.board.fairmark.com/board1/messages/19233.htm

b) With the new rules on being able to use IRAs to pay for
school tuitions, it may be worth doing some research to 
see if any of that money can be used towards home schooling
costs? 

c) From the teacher's perspective? You betcha! 
You can take deductions for the cost of the educational materials, 
books, etc. Justification? In order for the home schooling 
to be recognized by the state, the parent has to be certified
to teach (within their own special rules). 

There are standards and oversight through the National Association 
of the State Boards of Education - see this discussion
http//www.nasbe.org/Educational_Issues/Briefs/Policy_Updates/Gover/homeschooling.pdf.

d) As to the new adjustment to income for teachers, here's the
opinion of the Home School Legal Defense Association - Nope!
http//www.hslda.org/docs/news/hslda/200203144.asp


Various states may have some provisions for home schooling
benefits. I found one legislative proposal in New Mexico - in 1999. 
http//www.abqjournal.com/news/xgr99/sum05-06.htm
I didn't follow it to see whether it was enacted. 

This should give you a good starting point to substantiate
your right to take some deductions.

Your TaxMama-ga

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Request for Answer Clarification by lyork1-ga on 07 Nov 2002 16:38 PST

I have found the info I needed elsewhere. Thanks

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Clarification of Answer by taxmama-ga on 07 Nov 2002 17:20 PST

Dear LYork,

Thanks for tip.

And that's a great idea - to invite more students. 
It will help you cover some of your costs. 

You'll also be able to take deductions for office in
home, using the 'daycare' formula on Form 8829
http://www.irs.gov/pub/irs-pdf/f8829.pdf
(See the section for lines 4-6?)

Just remember, if you use those office in home deductions,
while you will save taxes now, when you sell your house,
you'll lose part of the $250,000 ($500 for couples) cushion
on gains on personal residences. But, if you're planning 
on being there for the forseeable future....go for it!

Besides, your child will thrive on some company.

Thanks again.

Your TaxMama-ga

Very good and broad info. Thanks

I think I disagree with Arlene; Small tax advantages are likely
possible on a schedule C, such as depreciating the computer your
student uses. If you get greedy, an audit is likely, which is a loss
of your time and stress on your ulcers, even if you win (20%
probability) Registering as an accademy seems very unethical if you
are ill prepared and/or unwilling to accept additional students, but
you may be able to pull it off if you produce some advertizing flyers,
exchange a few letters with parents who are considering use of your
service etc. Generally IRS (both federal and North Carolina) accept
apparent effort even if no bottom line results. You could receive a
large tax fraud fine, if you have little evidence of attempting to
recruit more students than your only child, and the auditors are very
good at spotting fake promotions, so you need to take a chance that
you will have one or more additional students long term. If you are
unwilling to take that chance you should forget the whole scam.   Neil

This comment is  for neilzero-ga : You gave some good information but
you also implied some "scam" to use your words. Please note that the
State of NC requires all homeschool applicants to meet educational
requirements and to give a name to the school, ie York Academey, York
School, York Educational Center, etc. These are state requirements not
a scam! But I like your idea of have other students, I would love it ,
and am now going to pursue it.