WASHINGTON, D.C. – Contrary to what some bloggers (many of whom support Donald Trump’s presidential campaign) and the Internet rumor mill have been saying, Sen. Ted Cruz does not support federal regulation of home schooling.

The source of the myth is Cruz’s co-sponsorship of S.306, a bill introduced during this session of Congress by Sen. Mike Lee (R-UT). Some form of the bill has been introduced since 2000, but the measure has never been controversial until presidential campaign politics intervened. What the measure does is expand who can use Coverdell education savings accounts by clarifying that for the purpose of Coverdell expenses only, the term “private school” includes home schools that operate under a state’s home school law.

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Coverdell education savings accounts were established as a means of helping families pay for college and other qualified education expenses without incurring tax penalties. Money deposited into the account – no more than $2,000 annually per account – can grow tax free and be paid out without a tax penalty for qualified education expenses. For years, private and parochial school tuition has been a qualified expense, but the ability of home schoolers to use the accounts has been murky at best.

According to Will Estrada, director of federal relations for Home School Legal Defense Association, a pro-home education group, 14 states currently define home schooling as a private school, which means home schoolers in those states can use Coverdell accounts. But for the remaining 36 states, there is no guidance for the use of Coverdells by home educators. S.306 simply says that home schools are private schools for the purpose of Coverdell savings accounts.

Contrary to some rumors, S.306 does not create a federal definition for home schooling. That’s something that would spark opposition from HSLDA, and the organization supports S.306 in its current form.

Opponents of Cruz and S.306 argue that giving home schoolers access to education savings accounts creates federal regulations for home education and, they insist, results in federal aid to home education that invariable comes with strings.

That is just not true.

Coverdell accounts operate just like an IRA or a health savings account. Just like a savings account or checking account, the money in a Coverdell, IRA or HSA comes from deposits made by the account holder. The advantage of a Coverdell over a regular bank account is that, just like an IRA or HSA, after the money is deposited it can grow with interest and not encounter a tax penalty as long as the money is withdrawn to pay education expenses. In the case of IRAs and HSAs the money is withdrawn to pay for retirement or health care expenses.

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As a provision of the tax code, Coverdells have a similar function as tax credits or tax deductions. Families frequently take advantage of the child tax credit, standard deductions or itemized deductions to reduce their tax liability. Coverdell accounts function as a means of controlling tax liability.

“In some ways [a Coverdell account] is actually even better than a tax credit or tax deduction, because those require you to show documentation to the IRS. The Coverdell has your own money in it; it isn’t something the IRS needs documentation for,” Estrada explained. “It is even more safe, if you will, from government regulation, than a tax credit.”

Estrada optimistically thinks that part of the confusion over Cruz’s stance on home education comes from the nature of S.306. The bill has several unrelated sections, some of which deal exclusively with a federal program that home schooling families are not eligible for, and that could be where casual readers of the legislation might conflate the Coverdell education savings account portion with the federal program portion of the legislation.

Authored by Brian Sikma
Originally posted here

Published with permission