How to File Idaho Parental Choice Tax Credit on Form 40

Where the Credit Goes on Form 40

After the Idaho State Tax Commission approves your Parental Choice Tax Credit application, you claim the award on your Idaho Individual Income Tax Return — the 2025 Form 40, Line 42 ("Parental Choice Tax Credit"). Form 39R is a separate resident supplemental schedule; it isn't used to claim this credit.

The amount on Line 42 is whatever the Tax Commission approved in your award notification, up to $5,000 per standard student or $7,500 per student with a qualifying disability. Enter the exact approved amount — don't estimate or round.

Because the credit is fully refundable, it works even when your Idaho tax liability is zero. If you owe $800 in state taxes and your approved credit is $4,200, your refund is $3,400.

Timing: File Before or After Your Award?

Here's where families trip up. The application window runs January 15 through March 15, and the Tax Commission issues award notifications by about April 15. But your Idaho return might be due before you hear back.

If you file before receiving your award notice: File your Form 40 as normal, without the credit. Once you receive your approval, file an amended Form 40 to add the credit on Line 42. The Tax Commission processes the amended return and issues the additional refund.

If you wait for your award: Hold your filing only if you can still meet your tax return deadline (or have a valid extension). Enter the approved amount directly on Line 42. If the award arrives after your filing deadline, file on time without the credit and amend after approval.

Families with straightforward tax situations can avoid an amended return by waiting for the award when it arrives before the filing deadline. If it arrives later, file on time and amend after approval.

The Advance Payment Option

The standard path is claiming the credit on your tax return and receiving it through your refund. But there's an alternative for families whose Modified Adjusted Gross Income is at or below 300% of the Federal Poverty Level.

Advance payment is a direct disbursement — the Tax Commission sends you a check or direct deposit within 60 days of your award notification, instead of making you wait until tax filing season.

Critical details:

• One-time per student, ever. This is not "one per year." Once a student receives an advance payment, they can never receive another advance payment in any future tax year. All subsequent years must go through the standard annual credit on Form 40.
• The reverse locks you out too. If a student's first credit comes as a standard Form 40 credit, they permanently lose advance payment eligibility.
• It's federally taxable. Advance payment amounts are treated as gross income on your federal return for the year you receive them. Plan for this when estimating your federal tax obligation.
• Reconciliation required. If you receive an advance payment, you must log into TAP, go to the Parental Choice Tax Credit Dashboard, upload receipts for all funds disbursed, and reconcile your spending by December 31 of the year following your award.

Standard Credit vs. Advance Payment: Which Is Better?

For most families, the choice depends on cash flow. If you've already spent the money on curriculum and tuition and can wait until your tax refund to be reimbursed, the standard credit preserves your one-time advance payment option for a future year when you might need it more.

If you genuinely cannot afford to front thousands of dollars in educational expenses and wait months for reimbursement, the advance payment bridges that gap — but be aware you're using a once-per-child resource.

The federal tax effect matters too. A $5,000 advance payment adds $5,000 to your federal taxable income, but the additional tax, if any, depends on your tax situation. Ask your tax preparer to estimate it before choosing.

Filing a Minimal "NRF" Return

If your family doesn't normally owe Idaho income taxes — common among lower-income families — you still need to file a prior-year Form 40 to establish TAP eligibility. The Tax Commission allows a minimal return:

• Write "Parental Choice" across the top margin
• List all dependent children
• Enter your income on Line 7
• On the 2025 Form 40, cross out the $10 on Line 31 and write "NRF" (Not Required to File)

This doesn't create a tax obligation. It just puts you in the system so TAP can verify your identity and residency.

The Idaho Parental Choice Tax Credit Parent Guide walks through the full Form 40 filing process, including the advance payment reconciliation steps and a side-by-side comparison to help you decide which option is right for your family's situation.

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