Minnesota has two programs for families with children in kindergarten through 12th grade: the K-12 Education Subtraction, and the K-12 Education Credit. Both programs help to lower taxes, but if you meet the eligibility requirements for the credit, you may qualify for a larger refund. Because the rules for the education credit and subtraction are so similar, this section will cover both tax areas.Topics include:Eligibility requirementsIn order to qualify you must:- have a qualifying child attending kindergarten through 12th grade at a public, private, or a qualified home school. (A qualified home school is a program that meets the approval of the school district.)
- have paid qualified education expenses during the year to help your qualifying child’s K-12 education.
- meet the household income limitations for the credit. (The limits do not apply to the subtraction.)
Credit-only filers:- The education credit’s limit on household income (federal adjusted gross income plus most nontaxable income) is based on the number of qualifying children you have in kindergarten through grade 12. If you have two or fewer qualifying children, your household income (federal adjusted gross income plus most nontaxable income) must be less than $37,500. The household income limit increases by $2,000 for each additional qualifying child.
- The credit is limited to 75 percent of paid qualifying education expenses. The remaining 25 percent cannot be used for the subtraction.
- The credit will not be allowed for amounts paid for after-school academic instruction and transportation provided by a sibling, parent, or grandparent of the child.
- Your filing status cannot be married filing separate.
See Credit Limits.Subtraction-only filers must have:- a qualifying child who attends a school located in Minnesota, Iowa, North Dakota, South Dakota, or Wisconsin.
- paid tuition for private schools and/or college courses used to satisfy high school graduation requirements.
Back to topLimits for the education creditTaxpayers may receive a refundable credit on Form M1 for qualified education expenses (except private school tuition) if they meet the following criteria:- The limit for the education credit’s household income (federal adjusted gross income plus most nontaxable income) is based on the number of qualifying children you have in kindergarten through grade 12. If you have one or two qualifying children, your household income (federal adjusted gross income plus most nontaxable income) must be less than $37,500. The household income limit increases by $2,000 for each additional qualifying child.
- Your filing status cannot be married filing separate.
The credit is limited to 75 percent of actual qualifying expenses. For example: a taxpayer pays an instructor $500 for her son's piano lessons. She also pays $50 for his school materials. Both of these are qualifying expenses. The taxpayer then qualifies for a credit of up to 75 percent of the $550 total, which is $412.50.LimitsIf your household income is $33,500 or less, your maximum family credit is limited to $1,000 times the number of your qualifying children in kindergarten through grade 12. If your household income is more than $33,500, your credit may be reduced. Your maximum credit limit will be determined when you complete your tax return. Use the Line 17 worksheet to determine credit eligibility.Computer expense limitationIf the qualifying computer expenses for your family exceed $200, the most you can use is:- $200 of the expenses for the subtraction, and
- $200 of the expenses for the education credit (if your income qualifies).
Prior to 2005: For tax years 2004 and earlier, taxpayers whose household income was less than $37,500 could claim an education credit equal to 75 percent of the qualifying expenses paid for the child, up to a maximum of $1,000 per child and $2,000 per family. The credit phased out for taxpayers whose household income was $33,501 to $37,499, and it was eliminated entirely at $37,500. Taxpayers completed the worksheet on the back of the M1ED to calculate the correct maximum amount.Actual expensesThe credit must be based on the taxpayer’s actual expenses paid during the tax year for which they have proof, including receipts and cancelled checks. The documentation is not required to be included with the return but should be available if requested by the department.No carryoverThere is no carryover to another year of unused educational expenses in excess of the limitation amounts. However, excess expenses for the credit may be used as an education subtraction for that year up to the subtraction limits.Prorated Credit – part-year, nonresidents, American IndiansPart-year and nonresidents multiply their credit by the percentage of income assignable to Minnesota as calculated on the M1NR. American Indians are not required to prorate the education credit because of nontaxable state income.Back to topLimits for the education subtractionTaxpayers who meet the eligibility requirements are allowed to subtract:- $1,625 per child for qualifying children in grades K-6
- $2,500 per child for qualifying children in grades 7-12
There is no family maximum.Qualifying computer expensesThe maximum amount for qualifying computer expenses is $200 per family. This amount is in addition to the $200 of qualifying computer expenses that a taxpayer may be able to include as a credit.Child’s gradeFor children who were in both 6th and 7th grades during the tax year, the taxpayer should use the grade at the end of the tax year to determine which limit to apply. Seniors who started college during the tax year must use the 12th grade limit.Actual expensesThe subtraction must be based on the taxpayer’s actual expenses paid during the tax year for which they must have proof, including receipts and cancelled checks. The documentation is not required to be included with the return but should be available if requested by the department.No carryoverThere is no carryover of unused educational expenses that are in excess of the limitation amounts.Back to top.Differences between the credit and subtractionPrivate school tuitionTuition paid to a nonprofit or private school, or for college courses that are used to satisfy high school graduation requirements, are allowable for the subtraction but not for the credit.Five-state areaFor expenses to qualify as a subtraction, the school must be located in Minnesota, Iowa, North Dakota, South Dakota, or Wisconsin. However, the requirement that the school be located in one of these five states does not apply for the qualifying expenses (with the exception of transportation expenses) used for the credit.MS 290.0674For more information see Fact Sheet #8, Education Subtraction and CreditBack to top
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education_credits_subtractions Table of Contents
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