Iowa Tuition & Textbook Credit and Private Religious Schools

For years, I have told my clients that they couldn’t take the Iowa Tuition & Textbook Credit if they sent their kids to a private religious school.

Iowa law states that the credit cannot be taken for tuition expenses related to the teaching of religious doctrines.

A client challenged me on this, and I now see that I was wrong. (Yes, I do make mistakes, and I am not afraid to admit to it in public!)

The client told me the principal of the private school she sends her kids to was one of the people who helped get the credit passed years ago. The principal told her that the intention was that only tuition costs directly attributed to teaching religious doctrines would be excluded. All other costs, including tuition that was for general education, would count towards the credit.

So I asked Iowa Department of Revenue. Here’s the response I got:

The portion of the tuition & textbook fees not used for religious purposes would qualify for the credit.  They would need to separate out the religious teaching, but the portion not for religious teaching can qualify.

So if you send your kids to a private religious school, and you have a way to break out the percentage of time devoted to religious teachings vs. the time spent on general education, your tuition expenses would be included towards the credit up the the percentage of time spent on general education.

Example

Annie sends her child to a private Catholic school. Tuition is $5,000/year. The school spends 20% of its time on religious instruction. Annie can count 80% of the tuition ($4,000) toward the credit.

(NOTE: while $4,000 would technically count toward the credit, remember that the credit is actually calculated on only the first $1,000 of expenses.)