Our schools stopped in-person instruction due to the pandemic in March. Within a few weeks, it was evident that we were going to have to make some changes. My daughter, who was studying for the German AP exam, was encouraged to practice at home. Since I could – at best – only order a Kolsch and a pretzel in German, it was clear that we would need some outside help. Ditto for Calculus: even though I love math and yes, was on the math team in school (insert geek joke of your choice here), I could not, years later, be reliably depended on to calculate the derivative of an indefinite integral without a refresher. We eventually signed up with an online tutoring service to help fill in the blanks.
Several weeks later, I started receiving questions from parents in similar situations. Many asked whether parents could claim a tax deduction for virtual tutors and other resources to help out with school during COVID. My answer, each time: unfortunately, no.
When the questions kept coming (What about extra computers? Can I deduct the cost of faster internet?), I reached out to my representatives in Congress. I asked Sens. Pat Toomey (R-PA) and Bob Casey, Jr (D-PA) whether there might be any tax measures specifically geared to parents who were paying more out of pocket as a result of virtual education.
Sen. Toomey’s office assured me that more funding was on the way for schools, writing, “These funds should be focused on ensuring students and faculty are safely back in the classroom this fall. From the experience this past spring, every parent knows that virtual education is no substitute for in-person instruction.” But his office did not provide any input on tax measures tailored to those parents who could not send their children back to school.
Sen. Casey’s office, however, directed me to S. 4488, the Tax Relief for Families Suffering from Government-Mandated Shutdowns Act of 2020. The bill was introduced by Sen. Rand Paul (R-KY) and would provide tax deductions for certain business expenses, dependent care expenses, and elementary school education expenses, including virtual and at-home learning. It was referred to the Senate Committee on Finance, where it currently sits.
You can read the bill here (downloads as a PDF). It’s not that long as tax proposals go (just eight pages), but to save you from even more online reading, here’s a quick summary:
- Deductions for Unreimbursed Business Expenses. The bill would essentially undo part of the Tax Cuts and Jobs Act (TCJA) and again allow tax deductions for unreimbursed business expenses. That’s been a hot topic for many employees this year. Currently, you cannot deduct home office expenses if you are an employee; the same is true for other unreimbursed business expenses. It’s one of several changes intended to be absorbed or mitigated by the doubling of the standard deduction. But now that those costs are going up, not all taxpayers are happy with the change.
- New Deduction for Household & Dependent Care Services. The bill would introduce a new deduction (a new section 224 in chapter 1, subchapter B) for household and dependent care services in an amount equal to employment-related expenses during the year. There would be no double-dipping allowed, so if the costs were already covered under a dependent care assistance programs or already claimed as part of the dependent care credit, the deduction would be disallowed.
- Deduction for Elementary & Secondary School Expenses. The bill would also create a deduction for eligible “tuition and related expenses” plus certain “qualified expenses” up to $1,000. “Tuition and related expenses” would include expenses for tuition, fees, academic tutoring, and special needs services in connection with the enrollment or attendance at an elementary or secondary school student at a public, private, or religious school, as well as boarding expenses. “Qualified expenses” would include expenses for books, supplies, and other equipment connected to enrollment or attendance at an elementary or secondary school student at a public, private, or religious school, as well as expenses for the purchase of any computer technology or equipment or internet access and related services used by you, your spouse or your dependent “during any of the years such dependent is in school.” The term schools would also include home schools.
- Deduction for Internet Expenses. The bill would also allow a specific deduction under section 62 (so, that means it applies to business expenses) for access to the internet. But don’t get too excited: it’s not to exceed $500 for the year.
There’s a lot to sort out in this bill, and I think it’s safe to say that it won’t sail through as-is. But it is evidence that Congress is clearly aware that the pandemic has changed not only the way we do business with our employers, but also the way that we run our homes. Certain expenses – like faster internet and academic tutoring – are clear consequences of remote schools and novel work arrangements. And pullbacks on other deductions – like the home office deduction – that didn’t attract much attention when they went into effect beginning in 2018, are now viewed by many as too restrictive.
Whether those things should change, and whether tax breaks are the way to do it, aren’t settled. But what is clear is that the questions are being asked – and Congress is paying attention.
(You can read more about working from home here.)