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Oklahoma Parental Choice Tax Credit Act: What Homeschool Families Need To Know

Oklahoma Parental Choice Tax Credit Act: What Homeschool Families Need To Know

IMPORTANT UPDATE! On October 24, 2023, the Oklahoma Tax Commission updated the rules utilizing feedback from the public. Our FAQs have been updated accordingly, as of 10/26/2023.

Thank You! We would like to extend our thanks to all of you who reached out to the Oklahoma Tax Commission to submit comments, as well as to the OTC for thoughtfully considering the submissions. You can check out the OTC website or reach out to the OTC with additional feedback, questions, or thanks by email to parentalchoice@tax.ok.gov.

The rules were submitted to the Governor, Speaker of the House, and the Senator Pro Tem on October 24, 2023. Section 710:50-15-118 can be viewed on the Oklahoma Tax Commission's website.

Things to be aware of:

  1. The FAQs listed on the OTC's website currently state that a 1099-G will be issued. This is only stated under the Homeschool tax credit portion on the page. This would make the tax credit taxable income.
  2. The tax credit can ONLY be claimed on your taxes. The first year you can claim the credit will be 2024 (when you file it in 2025).

OPSA has put together this Frequently Asked Questions blog to help homeschool families learn more about how the Oklahoma Parental Choice Tax Credit of the ASPIRE Oklahoma Plan applies to them. We have tried to cover everything currently known about the refundable tax credit, however, as the Oklahoma Tax Commission makes decisions about the tax credit's implementation more information will be added to this blog. We suggest you bookmark this blog and check back frequently for the most up-to-date information. In the meantime, you can email any questions to our Director of Parent Services, Lucia Frohling, at LFrohling@okpsaedu.org

Want to learn more about the Oklahoma Parental Choice Tax Credit of the ASPIRE Oklahoma Plan for private school parents? Check out this blog post.

Want to learn more about the historic public school investment portion of the ASPIRE Oklahoma Plan? Check out this blog post.

 

Q: What is a refundable tax credit?

A: Refundable tax credits are called "refundable" because if you qualify for a refundable credit and the amount of the credit is larger than the tax you owe, you will receive a refund for the difference. For example, if you owe $3,000 in taxes and qualify for a $5,000 refundable tax credit, you would receive a $2,000 refund.

 

Q: When will the Oklahoma Parental Choice Tax Credit Act take effect?

A: January 1, 2024 

 

Q: Who will manage Oklahoma Parental Choice Tax Credit? 

A: The Oklahoma Tax Commission.

 

Q: Can I claim the Oklahoma Parental Choice Tax Credit for the entire 2023-2024 school year? 

A: No. You can use it for the spring semester of 2024. The Oklahoma Parental Choice Tax Credit Act begins with tax year 2024, so the 2023 Fall semester is not eligible to be claimed. Starting in the Fall semester of 2024, the entire school year will be eligible.

 

Q: Do I have to utilize the Oklahoma Parental Choice Tax Credit if my child is homeschooled? 

A: No. Claiming the tax credit is 100% at the discretion of each eligible taxpayer.

 

Q: Can I use the Oklahoma Parental Choice Tax Credit to homeschool my child?

A: Yes. Families who choose to homeschool qualify for a tax credit equal to $1,000 per student under the plan. A taxpayer claiming this credit must submit receipts to the Oklahoma Tax Commission when you file your tax return.  

 

Q: What receipts do I submit to the Oklahoma Tax Commission to homeschool my child?

A: You will need to submit the applicable receipts for qualified expenses such as curriculum and learning materials, school supplies, any costs associated with field trips, and any other applicable educational expenses to the Oklahoma Tax Commission when you file your 2024 tax return.  

 

Q: What educational expenses qualify for this tax credit?

A: “Qualified expenses” for the purpose of claiming the credit include:

  • tuition and fees for nonpublic online learning programs;
  • academic tutoring services provided by an individual or a private academic tutoring facility;
  • textbooks, curriculum, or other instructional materials including, but not limited to, supplemental materials or associated online instruction required by an education service provider;
  • fees for nationally standardized assessments including, but not limited to, assessments used to determine college admission and advanced placement examinations as well as tuition and fees for tutoring or preparatory courses for the assessments.

 

Q: Is there a cap on the amount of tax credits available for Oklahoma homeschool families?

A: Yes. There is a cap (as a whole for the program) of $5 million in tax credits available per year for use by all Oklahoma families who homeschool. The best course of action would be to file your 2024 tax return as soon as possible in 2025. 

 

Q: What else should I know about accepting the Oklahoma Parental Choice Tax Credit?

A: Participation in the Oklahoma Parental Choice Tax Credit Program shall have the same effect as a parental revocation of consent, which means that the child’s public school district is no longer required to provide special education services. The Oklahoma State Department of Education (OSDE) will be responsible for providing parents, legal guardians, custodians, or other persons with the legal authority of eligible students with disabilities notice of this. Note: This same language is in the Lindsey Nicole Henry (LNH) Scholarship statute and has since been found to be in violation of Federal Child Find regulations. It is expected that the language in both statutes will be appealed.

 

Q: Who is responsible for sharing ratings, reviews, and information about education service providers? 

A: The Oklahoma State Department of Education (OSDE) has been directed to create a user-friendly website for users to publicly rate, review, and share information about education service providers. OPSA will update the answer to this question when more information is available. 

 

Q: What if I move my child from homeschool to an accredited private school?

A: You may be eligible for an adjusted tax credit amount for homeschooling for the length of time they were homeschooled. You are eligible for an adjusted tax credit amount for the amount of time that the student ise enrolled in the accredited private school (under the same parameters as if the student was there the entire year), starting in tax year 2024. 

 

Q: What if I move my child from homeschool to a public traditional, charter, virtual, or magnet, or non-accredited private school?

A: You are eligible for an adjusted tax credit amount for homeschooling for the length of time they were homeschooled within a tax year. Households are not eligible to claim the credit for an eligible student who enrolls as a full-time student in a public school district, public charter school, public virtual charter school, or magnet school.

 

Q: Can I receive pre-payment installments through the Oklahoma Parental Choice Tax Credit if I homeschool my child?

A: Not at this time. The Oklahoma Parental Choice Tax Credit Act directs the Oklahoma Tax Commission (OTC) to establish a process for applying for private school tax credits in order to receive installment payments:

 

Q: Will the Oklahoma Parental Choice Tax Credit end or go away?

A: In the event of a failure of the State of Oklahoma’s revenue, pursuant to the Oklahoma State Finance Act, the Oklahoma Parental Choice Tax Credit shall be reduced proportionately to the reduction in the amount of money appropriated to the State Board of Education for the financial support of public schools for the fiscal year in which the failure of revenue occurs.

 

Q: Can I be audited by the Oklahoma Tax Commission if I claim the Oklahoma Parental Choice Tax Credit?

A: Yes. As is recommended for all receipts, it is best to keep copies of receipts and returns for at least seven (7) years. The OTC shall have the authority to conduct an audit or contract for the auditing of receipts for qualified expenses.

 

Q: Will I have to return credits if I claim expenses that don’t meet the requirements of the Oklahoma Parental Choice Tax Credit?

A: Yes. The OTC shall be authorized to recapture the funds on a prorated basis if an audit conducted shows that the credit was claimed for expenditures that were not qualified expenses or it finds that the taxpayer has claimed an eligible student who no longer attends a private school or has enrolled in a public school for the period in which the credit was claimed, or the taxpayer failed to comply with other provisions of the tax code.

Q: Will the amount of the tax credit be reduced if I owe state taxes?

A: Yes. The OTC will deduct from the amount of credit due the amount of any delinquent state tax, penalty, or interest that the taxpayer owes.

Q: Can another family member (grandparents, aunt, uncle, etc.) claim the Oklahoma Parental Choice Tax Credit if they’re the ones who pay for my child’s qualified expenses?

A: Yes. The Act states that the credit is available for any Oklahoma taxpayer who incurs a qualified expense on behalf of an eligible student. Two taxpayers cannot claim the same credit on the same eligible student. A taxpayer in this instance is defined as a biological or adoptive parent, grandparent, aunt, uncle, legal guardian, custodian, or other person with legal authority to act on behalf of an eligible student.

 

Disclaimer: The information provided in this material does not, and is not intended to, constitute legal or tax advice. All information, content, and materials are for general informational purposes only.  

Readers of this material should contact their attorney or tax professional to obtain advice with respect to any particular legal or tax-related matter.  The information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  

The views expressed are those of the individual authors writing in their individual capacities only – not those of their respective employers, any state agency, or committee/task force as a whole.  All liability with respect to actions taken or not taken based on the contents of this material are hereby expressly disclaimed.  The content on this material is provided "as is;" no representations are made that the content is error-free.

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