MEMPHIS, Tenn. — There’s confusion about Tennessee’s Education Savings Account vouchers and what exactly parents may owe come tax time.
Uncertainty from the state is worrying parents and could have a major impact on low-income families.
Designed to put state tax money into the hands of at-need parents, Education Savings Account (ESA) vouchers are supposed to even the playing field.
“The goal of the program is for low-income families or families that can’t afford private school; they’re given vouchers for their child to attend a private school," said Cincelia Evans-Gills, office manager of Brinson Tax Service, said.
At the Tennesee Department of Education’s budget hearing, Commissioner Penny Schwinn raised eyebrows when she said some ESA vouchers could be counted as income on federal taxes.
That caused some parents to be concerned families will be worse off than before if they’re forced to pay taxes they weren’t expecting.
“They have to pay taxes on that, that’ll be taxes on the back end," Evans-Gills said. "So that means it’ll eliminate their refund and even have them owing taxes when they’re used to getting back tax refunds.”
WREG reached out to the state for clarification and was sent a statement saying it’s possible families may have to include the vouchers when filing their federal income taxes.
In a follow up phone conversation, WREG was told it’s still unclear who or how many families will be required to report the ESA vouchers as income.
“We are going to do this to help out families, but then after they did it, they were like, we don’t know the other steps that we’re going to take," Evans-Gills said. "So it’s like, they thought they were doing it for the good, but they didn’t think it out all the way through.”
WREG is still waiting for more information from the Department of Education, and we’ll update this story when we hear from them.