New NC Tax Credit for Children with Disabilities – Up to $6,000 Annual Tax Credit

New NC Tax Credit for Children with Disabilities – Up to $6,000 Annual Tax Credit

Starting in 2011 with the passage of House Bill 344, there is a new North Carolina state tax credit available to certain individuals that claim children who have special education needs. The credit is equal to $6,000 annually for each qualifying child (i.e., $3,000 maximum credit per semester).

Who is a Qualifying Child?

To qualify for the credit, each child must meet all of the following criteria:

  • Has an eligible disability as defined by the state (see N.C.G.S. 115C-106.3(1))
  • Was determined to require an individualized education program (IEP) as defined by the state (see N.C.G.S. 115C-106.3(8))
  • Receives special education or related services on a daily basis.
  • Must have been enrolled in a public school or received special education or related services through the public schools as a preschooler for at least the two preceding semesters in the year in which the credit is claimed.

Note: There is a small list of disqualifiers which will make a child ineligible for the credit. The list includes the following:

  • Child cannot have been placed in a nonpublic school or facility by a public agency at the public expense.
  • Child cannot have spent any time enrolled as a full-time student taking at least 12 hours of credit in a postsecondary educational institution.
  • Child cannot have been 22 years of age or older during the entire semester.
  • Child cannot have graduated from high school prior to the end of the semester.

How to Claim the NC Special Education Tax Credit

The specifics on how to claim the credit on 2011 tax returns are currently in the design phase but are expected to be released by the upcoming tax season. However, there is a list of items that a taxpayer claiming this credit should be able to provide if requested. The list includes, but is not limited to, the following items:

  • The name, address, and social security number of each eligible dependent child for whom the credit is claimed and the name and address of the school(s) in which the eligible dependent was enrolled for more than 70 days each semester.
  • Certification that the child did not meet any of disqualifiers listed above.
  • The name of the local school administrative unit in which the child resides.
  • The amount of tuition paid to a qualifying educational institution(s).
  • Eligibility determination that the child has a disability that requires special education (see N.C.G.S. 115C-106.3(2) for the definition of a disability).

Simply Taxes, LLC is a local year-round tax preparation firm with an office located in North Raleigh. Our Raleigh accountants are ready to assist you with your questions pertaining to this tax topic and others.

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers.

Source: North Carolina House Bill 344

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