What Homeschoolers Should Know about the Tax Reform Bill
Posted in Homeschool View on Monday, December 11, 2017
After passing through the House and Senate, the Tax Cuts and Jobs Act is on the verge of becoming the most significant revision of the federal tax code in more than 30 years.
Work on the bill, however, is not complete. Because the bill has undergone 274 amendments since being introduced, the bill that the House approved is different than the one the Senate approved. Therefore, those differences currently need to be reconciled before the bill goes to the president for approval.
As an American citizen, it’s important to educate yourself on what the proposed bill does. According to the official website of Congress, the bill impacts individuals in a dozen main ways:
1. Replaces the seven existing tax brackets (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%) with four brackets (12%, 25%, 35%, and 39.6%)
2. Increases the standard deduction
3. Repeals the deduction for personal exemptions
4. Establishes a 25% maximum rate on the business income of individuals
5. Increases the child tax credit and establishes a new family tax credit
6. Repeals the overall limitation on certain itemized deductions
7. Limits the mortgage interest deduction for debt incurred after November 2, 2017, to mortgages of up to $500,000 (currently $1 million)
8. Repeals the deduction for state and local income or sales taxes not paid or accrued in a trade or business
9. Repeals the deduction for medical expenses
10. Consolidates and repeals several education-related deductions and credits
11. Repeals the alternative minimum tax
12. Repeals the estate and generation-skipping transfer taxes in six years
For homeschoolers, item #10 is an important part of the conversation, as it would allow homeschoolers to use tax-exempt funds to pay for homeschooling expenses through 529 College Savings Plans.
“My amendment expands 529s so now you can not only save to go to college, you can also spend from your 529 plan on K-12 education expenses for public schools, for private schools, for religious schools, for homeschooling,” said Texas Senator Ted Cruz in a press release. “Up to $10,000 a year, you can save in a tax-advantaged plan and spend $10,000 per child. You are in charge of your kid’s education. It is the most far-reaching federal school choice legislation ever passed.”
Despite being created with help from HSLDA, the bill has opponents in the homeschooling community.
“This doesn’t expand ‘choice’ for parents,” said Michigan homeschool parent activist Karen Braun to Breitbart News. “It expands the reach of the federal government and allows the feds to create definition of a ‘legitimate’ homeschool expense. What the feds define they will refine.”
In response to negativity, Cruz’s office said that homeschoolers’ fears about the bill were unwarranted.
“There’s no mechanism opening those who would utilize this program to any additional federal oversight,” Cruz spokeswoman Catherin Frazier tried to assure. “The K-12 and/or homeschool provision would be regulated just as it is currently, i.e., by state and local governments.”
Comments(0 comments)