PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" ""> HR 3753/ S 1691-Homeschool NonDiscrimination Act 2005

HR 3753/ S 1691-Homeschool NonDiscrimination Act 2005

Wednesday, September 21, 2005

Updated Section

Updated September 16, 2005

Homeschool Non-Discrimination Act of 2005:

(a) IN GENERAL- Paragraph (4) of section 530(b) of the Internal Revenue Code of 1986 (relating to qualified elementary and secondary education expenses) is amended by adding at the end the following new subparagraph:
`(C) SPECIAL RULE FOR HOME SCHOOLS- For purposes of clauses (i) and (iii) of subparagraph (A), the terms `public, private, or religious school' and `school' shall include any home school which provides elementary or secondary education if such school is treated as a home school or private school under State law.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act.

While it sounds laudable to include homeschool families under this section of the IRS code, the statement ‘if such school is treated as a home school or private school under State law' is problematic for homeschoolers in states which do not currently ‘treat’ them under state law. In order to qualify for a small tax benefit, states would need to enact laws which would ‘treat’ homeschoolers as a home or private school, thereby removing any independence homeschoolers in those states now enjoy.

Briefly, the savings accounts may be used to pay for elementary or secondary educational expenses related to enrollment or attendance at an eligible school for a designated beneficiary (child) such as tuition, books, tutoring, special needs services, room and board, uniforms and transportation. Computer equipment is included if it is used for educational purposes. The educational institution should be able to tell you if it is an eligible educational institution.

Up to $2000 may be added to each child’s account each year by qualifying parents and relatives and the money then belongs to the child. It is counted as the child’s asset and income when applying for education loans. If it is not used by the time the child is 30 years old, it becomes theirs. It should also be noted that trustee fees to manage the account may exceed the tax-free interest earned and in order to access this type of tax benefit, parents are required to file a tax return.

Since 2003 when Homeschool Non-Discrimination Act of 2005 was first introduced as HR2731 and S1562 some Christian parents have chosen to enroll their children in HSLDA’s Patrick Henry College. Ironically, because Patrick Henry College does not participate in any government funding programs, it is doubtful Coverdell accounts would qualify for use at Patrick Henry College. For more information contact Patrick Henry College or the Internal Revenue Service.

Another alternative to a government program would be to open a tax-free no-load mutual fund to save for your child’s education. To learn more about this type of investment program VISIT

Because these are private mutual fund investments, none of your fellow homeschoolers would have their freedom threatened by federal regulation so you could qualify. No state would have to institute homeschool laws to treat homeschools “as a home school or private school under State law” in states which currently do not regulate them as such.

Additionally, you and your family members would be able to save for your child without any limits on the amount you set aside and your educational choice will not have to be approved by the government.

Homeschoolers need to assess whether this small tax benefit is worth trading for legislation regulating homeschools in those states which do not currently do so.

To learn more about Coverdell ESA’s (Educational Savings Accounts) either request IRS publication 970 - Tax Benefits for Education – or visit their web site HERE
posted by Publius, 11:11 AM


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