4 Tuition and textbook credit for expenses incurred for dependents attending grades

kindergarten through 12 in Iowa. Taxpayers who pay tuition and textbook expenses of dependents who attend grades kindergarten through 12 in Iowa may receive a tax credit of 25 percent of up to $2,000 ($1,000 for tax years beginning prior to January 1, 2021) of qualifying expenses for each dependent who receives private instruction, as defined in Iowa Code section 422.12(1)“c,” or attends an elementary or secondary school located in Iowa. A taxpayer whose dependent receives private instruction is only eligible for the tuition and textbook credit for tax years beginning on or after January 1, 2021. For a taxpayer whose dependent attends an elementary or secondary school, in order for the taxpayer to qualify for the tuition and textbook credit, the elementary school or secondary school that the dependent is attending must meet the standards for accreditation of public and nonpublic schools in Iowa provided in Iowa Code section 256.11. In addition, the school the dependent is attending must not be operated for profit and must adhere to the provisions of the United States Civil Rights Act of 1964, and the provisions of Iowa Code chapter 216, which is known as the Iowa civil rights Act of 1965. 304.4(1) Tuition. For purposes of the tuition and textbook tax credit, “tuition” means any charge for the expense of personnel, buildings, equipment, and materials other than textbooks, and other expenses which relate to the teaching of only those subjects that are legally and commonly taught in public elementary or secondary schools in Iowa. “Tuition” includes charges by a qualified school for summer school classes or for instruction of a child who is physically unable to attend classes at the site of the elementary or secondary school. Expenses paid by a taxpayer, including a taxpayer whose dependent receives private instruction, for equipment and materials other than textbooks must be for equipment and materials required for attendance in Iowa in order to be eligible for the tuition and textbook tax credit. The following are examples of equipment and materials that may qualify for the credit provided they are required for attendance in school or for providing private instruction: a. Pocket folders and binders. b. Spiral notebooks and loose-leaf paper. c. Writing utensils, including pens, pencils, highlighters, colored pencils, crayons, and markers. d. Backpacks. e. Rulers. f. Calculators. g. Scissors. h. Computers, including rental fees paid to a school for the use of a computer. “Tuition” does not include charges or fees which relate to the teaching of religious tenets, doctrines, or worship in cases where the purpose of the teaching is to inculcate the religious tenets, doctrines, or worship. In addition, “tuition” does not include amounts paid to an individual or other entity for instruction that is supplementary to elementary or secondary school instruction or private instruction. Amounts paid to an elementary or secondary school or to a person providing private instruction for meals, lodging, or clothing for a dependent do not qualify for the tax credit for tuition. “Tuition” also does not include expenses for Internet services or Internet upgrades to facilitate remote learning. 304.4(2) Textbooks. For purposes of the tuition and textbook tax credit, “textbooks” means books and other instructional materials used to teach only those subjects legally and commonly taught in public elementary and secondary schools in Iowa. “Textbooks” includes fees or charges for required supplies or materials for classes in art, home economics, shop, or similar courses. “Textbooks” also includes books and materials used for extracurricular activities, such as sporting events, musical events, dramatic events, speech activities, driver’s education, or programs of a similar nature. Revenue[701] IAC 1/21/26 Ch 304, p.3 “Textbooks” does not include amounts paid for books or other instructional materials used in the teaching of religious tenets, doctrines, or worship, in cases where the purpose of the teaching is to inculcate the religious tenets, doctrine, or worship. For tax years beginning before January 1, 2021, “textbooks” does not include amounts paid for books or other instructional materials used in teaching a dependent subjects in the home or outside of an elementary or secondary school. For tax years beginning on or after January 1, 2021, “textbooks” does include amounts paid for books or other instructional materials used in teaching a dependent subjects in the home or outside of an elementary or secondary school if that dependent is receiving private instruction. 304.4(3) Extracurricular activities. For purposes of the tuition and textbook tax credit, amounts paid for dependents to participate in or to attend extracurricular activities may be claimed as part of the tuition and textbook tax credit. “Extracurricular activities” includes sporting events, musical events, dramatic events, speech activities, driver’s education, and programs of a similar nature. a. The following are specific examples of expenditures related to a dependent’s participation in or attendance at extracurricular activities offered by a qualifying school or offered in the course of private instruction that may qualify for the tuition and textbook tax credit: (1) Fees for participation in sports activities. (2) Fees for field trips. (3) Rental fees for instruments for bands or orchestras but not rental fees in rent-to-own contracts. (4) Driver’s education fees. (5) Cost of activity tickets or admission tickets to sporting, music, and dramatic events. (6) Fees for events such as homecoming, winter formal, prom, or similar events. (7) Rental of costumes for plays. (8) Purchase of costumes for plays if the costumes are not suitable for street wear. (9) Purchase of track shoes, football shoes, or other athletic shoes with cleats, spikes, or other features that are not suitable for street wear. (10) Costs of tickets or other admission fees to attend banquets or buffets for academic or athletic awards. (11) Trumpet grease, woodwind reeds, guitar picks, violin strings, and similar types of items for maintenance of instruments used in bands or orchestras. (12) Band booster club or athletic booster club dues, but only if dues are for the dependent and not the parent or adult. (13) Rental of a formal gown or a tuxedo for a dance or similar event. (14) Dues paid to clubs or organizations such as chess club, photography club, debate club, or similar organizations. (15) Amounts paid for music that will be used in music programs, including vocal music programs. (16) Fees paid for required general materials for shop class, agriculture class, home economics class, or auto repair class and general fees for equivalent classes. (17) Fees for a dependent’s bus trips to attend school or private instruction if paid to the school or the provider of private instruction. (18) Costs of band or athletic uniforms. (19) Costs of instrument lessons. b. The following are specific examples of expenditures related to a dependent’s participation in or attendance at extracurricular activities offered by a school or offered in the course of private instruction that will not qualify for the tuition and textbook credit. (1) Purchase of a musical instrument used in a band or orchestra. (2) Purchase of basketball shoes or other athletic shoes that are readily adaptable to street wear. (3) Amounts paid for special testing such as SAT or PSAT, and for Iowa talent search tests. (4) Payments for senior trips, band trips, and other overnight activity trips which involve payment for meals and lodging. (5) Fees paid to K-12 schools or to a private instructor for courses for college credit. (6) Amounts paid for T-shirts, sweatshirts, and similar clothing that is appropriate for street wear. (7) Amounts paid for special programs at universities and colleges. Revenue[701] Ch 304, p.4 IAC 1/21/26 (8) Amounts paid for a yearbook, annual, or class ring. (9) Fees for special materials paid for shop class, agriculture class, auto repair class, home economics class, and similar classes. For purposes of this paragraph, “special materials” means materials used for personal projects of the dependents, such as materials to make furniture for personal use, automobile parts for family automobiles, and other materials for projects for personal or family benefit. (10) Purchase of a formal gown or a tuxedo for a dance or similar event. (11) Amounts paid for sports-related social events. 304.4(4) Claiming the credit. The credit can only be claimed by the spouse who claims the dependent credit on the Iowa tax return as described in subrule 304.3(3). For example, for divorced or separated parents, only the spouse who claims the dependent credit on the Iowa return can claim the tuition and textbook credit for tuition and textbook expenses for that dependent. In cases where married taxpayers file separately on a combined return form, the tuition and textbook credit shall be allocated between the spouses in the ratio in which the dependent credit was claimed between the spouses. Example: A married couple has two dependent children and claimed a tuition and textbook credit of $500 related to both children on their 2011 Iowa return. The taxpayers filed separately on a combined Iowa return form for 2011. One spouse claimed both of the dependent credits on the Iowa return. The $500 tuition and textbook credit will be claimed by the spouse who claimed the dependent credits on the Iowa return. Example: A married couple has three dependent children and claimed a tuition and textbook credit of $600 related to all three children on their 2011 Iowa return. The taxpayers filed separately on a combined Iowa return form for 2011. One spouse claimed one dependent credit, and the other spouse claimed two dependent credits on the Iowa return. The spouse who claimed one dependent credit will claim $200 of the tuition and textbook credit, while the spouse who claimed two dependent credits will claim $400 of the tuition and textbook credit. This rule is intended to implement Iowa Code section 422.12. [ARC 8702B, IAB 4/21/10, effective 5/26/10; ARC 9820B, IAB 11/2/11, effective 12/7/11; ARC 6240C, IAB 3/9/22, effective 4/13/22; Editorial change: IAC Supplement 11/2/22; Editorial change: IAC Supplement 10/18/23]