Readers' FAQ About Tax Deductions for Private Schools

Tuition Isn't Deductible but You Might Still Get a Tax Break

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"Dear Tax Guide: We send our daughter to a private elementary school. Is there any way the tuition we pay is tax deductible?"

Sorry to be the bearer of bad news, but the short answer to this question is generally, "No." The good news is that there are a couple of exceptions to the bad news.

Education Expenses

Education expenses are only tax deductible for postsecondary tuition and fees. This would include community colleges, universities, trade or vocational schools and other accredited education programs following high school.

There are various tax breaks for education expenses, such as the tuition and fees deduction, the Lifetime Learning Credit and the American Opportunity Tax Credit. But these tax breaks are not available for private elementary and high school tuition.

Charitable Contributions

Charitable contributions are tax-deductible if you itemize your deductions on Schedule A with your tax return. Charitable contributions include cash you gave to churches, nonprofits, and other qualified charities without getting anything in return. If you do receive something in return, you must decrease the value of your gift by the value of the item or service received.

For example, people often buy tickets to a charity ball, concert or another event to support a charity. If you pay $100 for a ticket to an event that would normally cost $25, the real value of your donation is $75, not the full $100, because you received something in exchange for your donation.

You paid tuition and your daughter received an education in exchange, so this would not meet the definition of a charitable donation and you cannot deduct this on Schedule A if you itemize. But if you make a charitable gift to the school in addition to tuition and other fees you pay, this may be tax deductible.

 

Now for the good news.

The Coverdell Education Savings Account

The American Taxpayer Relief Act of 2012 made provisions for Coverdell Education Savings Accounts permanent. This tax break applies not only to postsecondary education costs but to high school and elementary education expenses as well. You can contribute up to $2,000 a year to a Coverdell ESA. You can’t deduct your contributions, but the money grows tax-free and you can withdraw all of it for tuition and other qualified expenses, which can add up to thousands of dollars in tax savings over the course of your daughter’s education.

As of 2016, your modified adjusted gross income must be less than $110,000 to qualify for this tax break. Most taxpayers’ MAGIs are the same as their adjusted gross incomes but check with a tax professional if you’re not sure. 

The Child and Dependent Care Tax Credit

Although you can’t deduct your daughter’s tuition and education expenses, you may qualify for a tax break if she attends a before- or after-school care program so you can work or look for work. Your child must be younger than age 13, and you must separate out the cost of the care program from the tuition— the school should be able to help you with this.

The amount of the credit varies by the taxpayer and is calculated on up to $3,000 in total work-related child care expenses for one child, or $6,000 for two or more children. In other words, if you spend $1,500 in the after-school care program and $500 on summer camp so you can work or look for work, you can claim a percentage of these costs as a tax credit. The percentage depends on your AGI. If you're married, your spouse must also work or be looking for work— in other words, she's not available during these hours to care for your child. 

I hope this clarifies matters for you.

Best wishes this filing season,

NOTE: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.