Answers to questions raised during PEFNC special needs forum

More than 250 people attended a forum at the N.C. Museum of Natural Sciences on August 16, 2011 about a new historic state law that allows parents of children with disabilities to claim a tax credit of up to $6,000 for educational expenses that include private school tuition and therapy.

Dozens of parents and educators asked about the tax credit (House Bill 344 – Tax Credit for Children with Disabilities) to a panel of legislators and policy experts. Answers to some of those questions were not immediately available, which is why PEFNC has utilized this space to address concerns that were unanswered during the forum.

If you have a question that is not listed below, please contact Karen Duquette, PEFNC Policy Director, at KarenD@pefnc.org.

 

Do children with 504 plans qualify?

No. According to the Department of Public Instruction a 504 plan is a plan developed to ensure that a child has a disability.  A 504 plan is not the same as an individualized education program (IEP).  The law is explicit in that a child is only eligible if he/she is determined to require an IEP.

 

Are we required to prove that our chosen nonpublic school provides better support for our daughter’s special needs than the services provided by the public school?

No. There are no requirements in the law to report that a chosen nonpublic school provides better support than your child’s public school.

 

Are services that are not required by the IEP (individualized education program) eligible for this credit?

Yes. There is no stipulation in the law that only services stated in the IEP are eligible. According to the law, the tax credit can be claimed for tuition, special education and related services expenses.

Under the law “Special education is defined as specially designed instruction to meet the unique needs of a child with a disability. The term includes instruction in physical education and instruction conducted in a classroom, the home, a hospital, or institution, and other settings.”

Also under this law, “related services are those defined by the federal Individuals with Disabilities Education Improvement Act” (IDEA; 2004). These services include, but are not limited to:

– Speech-language pathology and audiology services

– Interpreting services

– Psychological services

– Physical and occupational therapy

– Recreation, including therapeutic recreation

– Early identification and assessment of disabilities in children

– Counseling services, including rehabilitation counseling

– Orientation and mobility services

– Medical services for diagnostic or evaluation purposes

– Parent counseling and training

Further definition of “related services” can be found at http://idea.ed.gov.

 

Will the public schools suffer or receive less money because of this law?

No. Since the amount of the tax credit is less than the average cost of educating a child with a disability in public schools, this particular tax credit program is designed to create savings for North Carolina. Therefore, public schools will save money and more funds will be available for public education.

 

If a public school student with an IEP (individualized education program) was homeschooled last year only, but is now returning to public school this year, when would he be eligible?

According to the law, and assuming he/she was homeschooled for the entire year, this student will be eligible only after he/she has been re-enrolled in public school for two consecutive semesters, beginning on or after July 1, 2011.

 

If you meet the qualifications, would additional tutoring (speech and reading) at home qualify for the credit?

Assuming the student is enrolled in a nonpublic school or a public school that charges tuition and the tutoring meets the definition outlined in the law; this type of tutoring would qualify. The law states that the “credit is equal to the amount the taxpayer paid for tuition and special education and related services expenses.” The law goes on to state that, “Special education” means specially designed instruction to meet the unique needs of a child with a disability. The term includes instruction in physical education and instruction conducted in a classroom, the home, a hospital, or institution, and other settings. Therefore, assuming it meets the definition in the law, this tutoring would qualify.

 

Does the IEP (individualized education program) have to state that additional tutoring would be beneficial?

No. The IEP does not have to state that additional tutoring would be beneficial. The IEP is only used to determine eligibility under this law.

 

My daughter has been in public school for 10 years.  We just transferred her to a private school this month (Aug. 2011).  She had an IEP (individualized education program) and received services daily.  Do we qualify?

Yes. Assuming your daughter had been in public school for at least the two preceding semesters and received her IEP at the public school. Eligibility for the tax credit began for semesters beginning on or after July 1, 2011.  Therefore, your family would qualify for the tax credit.

 

Is it possible for the public school system to identify the needs of a child and place the child in a school that accommodates their special needs?

Yes. This would be possible under the federal Individuals with Disabilities Education Act (IDEA).  However, we urge you to contact the Exceptional Children’s Division at the North Carolina Department of Public Instruction by calling (919) 807-3300 to learn more about how this program works.

 

How do we renew the tax credit every year?

The tax credit is renewed every year when state income taxes are filed – due on April 15th. Directions for filing individual income taxes can be found on the North Carolina Department of Revenue website here: http://www.dornc.com/downloads/D401.pdf#page=4.

 

Do we have to go back to the LEA (local education agency) to get a renewed IEP (individualized education program)?

Yes. According to the law, in order to maintain eligibility, all eligible dependent children are required to be reevaluated every three years by the local education agency (LEA) in order to verify that the child continues to be a child with a disability as defined by North Carolina General Statute 115C-106.3(1).

 

Are there any household income restrictions to qualify for this tax credit?

According to the law, there are no specific income restrictions to qualify for this tax credit. However, the law requires that a person claiming the tax credit must pay income taxes in North Carolina in order to receive the credit.

 

Does a student have to be enrolled any two semesters in the public school system or does it have to be the last two semesters in the 2010-11 school year to qualify for the tax credit?

Assuming the child is otherwise eligible (i.e. a student with a disability that requires and IEP and has attended public school for the two preceding semesters); the law states that the child must have been enrolled for at least the preceding two semesters in a public school before moving to a nonpublic school and claiming the tax credit.

 

My son is autistic, has an IEP (individualized education program) and receives speech therapy twice a week.  He also receives speech and occupational therapy from a private company.  If he is enrolled in a private school, will he qualify for the tax credit?

Unfortunately, this child will not qualify. Assuming the child is currently enrolled in a private school, the law states that to be eligible for the tax credit, an eligible child must have first been enrolled for at least the preceding two semesters in a public school and received special education or related services on a daily basis.

 

Would parents still be eligible even though the IEP (individualized education program) may not state “daily services”?

According to the law, the IEP must outline a plan for the child to receive services on a daily basis in order for the child to be eligible. However, the IEP might not explicitly state “daily services.”

 

What documentation (7 items) is required to claim the tax credit?

According to the law, in order to substantiate the credit, a taxpayer must provide all of the following information, if requested by the Secretary of Revenue:

– 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 or schools in which the eligible dependent child was enrolled in and attended for more than 70 days of each semester.

– A certification that there were no disqualifying factors.

– The name of the local school administrative unit in which the eligible dependent child resides.

– The amount of the tuition paid to a public school for each semester the eligible dependent child was enrolled in and attended that public school.

– The eligibility determination that the eligible dependent child is a child with a disability who requires special education and related services.

– A listing of the tuition and special education and related services expenses on which the education expenses tax credit is based.

– For home schools, a listing of the special education and related services expenses on which the education expenses tax credit is based.

 

Will students that have IEPs (individualized education programs) developed at the beginning of the school year be able to enroll in a private school immediately thereafter?

Yes. According to the law, students in this scenario would be eligible as long as they have been enrolled in public school for the two preceding semesters and are otherwise eligible (i.e. a student with a disability that requires and IEP).

Parents should note that the law states that “the amount of the education expenses tax credit is reduced for any semester in which the eligible dependent child spent any time enrolled in a public school. The amount of the reduction is equal to the percentage of the semester that the eligible dependent child was enrolled in a public school.”

 

What happens to the “money saved” that is not reinvested in special education programs within the public schools?

According to the law, funds saved as a result of this tax credit program will be placed into a new special education trust fund under the direction of the North Carolina Department of Public Instruction.  The law states that this new trust fund may only be used for special education and related services for children with disabilities. In addition, the monies in the fund must be used to reimburse local educational agencies for conducting reevaluations for continued eligibility and developing revised individualized education programs (IEPs) for children with disabilities.

 

Have legislators thought about reinvesting the “savings” into public schools that parents do not select for their special needs child(ren) to help those that are ineligible for this tax credit?

Yes. When the North Carolina General Assembly passed this law it also established a special needs trust fund to be administered by the North Carolina Department of Public Instruction to supplement funding for special education services in the public schools. Since the amount of the tax credit is less than the average cost of educating a child with a disability in public schools, this particular tax credit program creates a savings for the state. This savings will be placed into a newly formed special education trust fund.

 

Are charter schools public schools?

Yes. For more information, visit the Department of Public Instruction’s page for Frequently Asked Questions about charter schools at http://www.dpi.state.nc.us/charterschools/faqs.

 

What home school items are covered?

According to the law, for families who choose to home school, the tax credit will be equal to the amount the taxpayer paid for special education and related services expenses. The law goes on to state that “special education” is defined as specially designed instruction to meet the unique needs of a child with a disability.” The term includes instruction in physical education and instruction conducted in the home, a hospital, and other settings.

Also under this law, “related services” are those defined by the federal Individuals with Disabilities Education Improvement Act (2004). These services include, but are not limited to:

– Speech-language pathology and audiology services

– Interpreting services

– Psychological services

– Physical and occupational therapy

– Recreation, including therapeutic recreation

– Early identification and assessment of disabilities in children

– Counseling services, including rehabilitation counseling

– Orientation and mobility services

– Medical services for diagnostic or evaluation purposes

– Parent counseling and training

Further definition of “related services” can be found at http://idea.ed.gov.

 

After three years, would the child no longer be eligible since they haven’t been in public school?

According to the law, and assuming the child has qualified for the tax credit, in order to maintain eligibility all eligible dependent children will be required to be reevaluated every three years by the local education agency (LEA) in order to verify that the child continues to be a child with a disability as defined by North Carolina General Statute 115C-106.3(1). Therefore, under these guidelines, eligibility for the child will continue.

 

What if a public school outside of my district can better accommodate special needs students than the school that my child has been assigned to?

If your child has disabilities, a transfer to another school to better accommodate your child might be possible under the federal Individuals with Disabilities Education Act (IDEA).  We urge you to contact the Exceptional Children’s Division at the North Carolina Department of Public Instruction by calling (919) 807-3300 to learn about how this program works.

However, this new tax credit law allows eligible children to receive a tax credit for tuition only at a nonpublic schools or public schools that charges tuition as outlined in North Carolina General Statute 115C-366.1

 

My child is three and does not have an IEP (individualized education program) yet.  Can I request an evaluation from my health care provider?

According to the law, a child needs to be enrolled in public school as a preschool child for two academic semesters and have an IEP created by the public school requiring daily services before your family can claim this tax credit.   Therefore, you may request an IEP from a private provider; however, under the law this will have no bearing on your eligibility for the tax credit this year.

 

If my preschooler has been assigned an IEP (individualized education program), but attends a private preschool, when will he be eligible for the tax credit?

According to the law, assuming your child receives services on a daily basis, he will only be eligible after he has received an IEP from the public school and attended public school for at least two semesters. The law states that a “child will be eligible after he/she has either (i) enrolled in a public school or (ii) received special education or related services through the public schools as a preschool child with a disability” for at least the two preceding semesters.

 

Who determines “continued eligibility” once a student is eligible for the tax credit?

According to the law, continued eligibility is determined by the local education agency (LEA). In order to maintain eligibility, the law requires all eligible dependent children to be reevaluated every three years by the local education agency in order to verify that the child continues to be a child with a disability as defined by North Carolina General Statute 115C-106.3(1).

 

If a person claims the credit, do they terminate educational rights for their child(ren)?

Once a child leaves the public school system and is home schooled or privately educated they terminate their educational rights under the federal Individuals with Disabilities Education Act (IDEA). However, if the child returns to public school those rights, under IDEA, are restored.

Further explanation can be found on the U.S. Department of Education website at http://idea.ed.gov.

 

Our child attended public school for 10 years prior to being enrolled in a private school due to special needs on March 4, 2011.  Do we qualify?  If not, is there an appeals process?

Unfortunately, you do not qualify.  In order to be immediately eligible, assuming all other eligibility requirements are met (i.e. a student has a disability that requires an IEP); the child must have been enrolled in and attended a public school for at least the two preceding academic semesters prior to first receiving the tax credit. As the credit can be applied to expenses incurred during semesters beginning on or after July 1, 2011, and since it appears this child was not in public school for the two preceding semesters leading up to July 1, 2011, it does not appear the child would be eligible for the credit given the assumptions above. As of now, there is no appeals process currently available.

 

My daughter got an IEP (individualized education program) at 12 months. At 36 months, she will be enrolled at a Durham Public Schools preschool.  The maximum number of preschool is three days and not five although her IEP mandates daily help.  If she stays at a public school until kindergarten, but is then enrolled in a specialized school, will she qualify with her IEP from preschool?

Yes. According to the law, and assuming your daughter received an active IEP from the public school system and was enrolled in the public preschool and receiving special education or related services for the two previous semesters before moving to a nonpublic school, she would be eligible. However, under this law the “specialized school” must be either a nonpublic school or a public school that charges tuition per North Carolina General Statute 115C-366.1.

 

Who decides who qualifies?

Qualification will be determined by the Department of Revenue. According to the law, in order to substantiate the credit, a taxpayer must provide all of the following information, if requested by the Secretary of Revenue:

– 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 or schools in which the eligible dependent child was enrolled in and attended for more than 70 days of each semester

– A certification that there were no disqualifying factors

– The name of the local school administrative unit in which the eligible dependent child resides

– The amount of the tuition paid to a public school for each semester the eligible dependent child was enrolled in and attended that public school

– The eligibility determination that the eligible dependent child is a child with a disability who requires special education and related services

– A listing of the tuition and special education and related services expenses on which the education expenses tax credit is based

– For home schools, a listing of the special education and related services expenses on which the education expenses tax credit is based.

 

Do foster parents have the right to deduct a personal exemption under Section 151(c) Revenue Code for their foster children? If so, are they eligible for the credit?

This is a matter we would defer to the IRS for guidance on. A foster child is defined as a possible dependent if he meets the age requirements, or is a full time student to a greater age, or any age if permanently disabled, and if the foster parent(s) provide over half the child’s support.  We think the place for referencing this is section 1040 at www.irs.gov. As each foster parent’s situation is unique, it is not practical to give a blanket response.

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