Frequently Asked Questions for Families

Under this program, financial institutions and tax-exempt organizations (lenders) can loan money to qualifying parents for certain K-12 educational expenses. The parents then assign their future income tax refund to repay the loan.

This program is subject to the following limitations:

• The most that parents can assign from their income tax refund in a year is $1,000 for each qualifying child, as defined for the state K-12 Education Credit. If the loan is more than the assigned amount, the parents are responsible to pay the difference themselves.
• The parents must be Minnesota residents who met the income requirements for the state K-12 Education Credit in the previous year.
• The Minnesota Department of Education must certify that the educational service or product purchased will qualify for the K-12 Education Credit. If certification is denied, the service or product provider may appeal the decision.)

If you are due a refund when you file your state income tax return, we will send your refund to the lender that issued you the K-12 Education Credit loan, up to the amount you owe the lender.

If you owe any other Minnesota taxes or government debts, we will apply your refund to the amount owed before sending them to your lender.

We will continue to apply your state income tax refund each year until any of your state taxes, government debts, and lender claims are paid in full.

You must also give the lender your Social Security number and full name so that we can match your request to your tax records. They will also ask for information to ensure you qualify for the credit.

Yes. We do not require you to use a tax preparer to file your return.

By sending Form M1EDA to the department, you are authorizing the lender offering you a K-12 Education Credit loan to make a claim against your state tax refund. The form assigns your credit to that lender.

You will need to contact the lender. Once you sign and return Form M1EDA, you cannot revoke your authorization with the Minnesota Department of Revenue. The lender has the authority to cancel the debt.

You will need to contact the lender. The assignment is for the full amount of the loan, not the amount you spent. The assignment will continue until you repay your loan in full or the lender cancels the debt.

You will need to contact the lender. You may not revoke or change your assignment with the Minnesota Department of Revenue. The lender must verify that the products or services purchased with the loan they provided meet the requirements of the K-12 Education Credit.

You will need to contact the lender. You can bring an action against the lender in court to recover the refund. You must bring the action within two years after we send the refund to the lender.

Yes. Keep a detailed record of your payments for education-related expenses. We may ask you to show these records if we have questions.

The third-party vendor receiving payment of the amount secured by an assignment must provide you with a plain language list that includes the cost of each product or service they charged you.

If you do not provide the receipts we request, we may adjust or deny the credit. We require proof of purchase to validate your claim for the credit.

• If you were married when you assigned the credit and became separated or divorced, both parties are responsible for the loan.
• If you were single when you assigned the credit and then marry, your spouse’s refund will also be applied to the loan if you file a joint return. You can contact the lender to try to recover the amount applied from your new spouse’s refund. We are not able to adjust the assignment.

The vendor should provide an itemized receipt allocating the purchase price to the various items in the package. If an item within the package is not clearly identifiable on the receipt, we may not allow the K-12 Education Credit for that item.

This allocation must be based on the fair market value (FMV) of the items in the bundled package. Vendors use the following formula for allocation:

(FMV of each item you received / Total FMV of all items you received) x Your purchase price

The total purchase price must be allocated to all items you received, including vendor-provided “gift” items (conditioned on the purchase of other items). The vendor does not need to allocate individual goods and services with a FMV of less than 2 percent of the total purchase price.

Your expenses for these educational goods or services only qualify if you paid them to the vendor during the tax year that you claim the credit.

For more information, see the example below.

Example

You purchased a $600 educational program from ABC Summer Camp for your qualifying child. The camp provided you with an itemized receipt for this purchase.