If you send your children to private school, you cannot write off many of the extra expenses that you incur -- secondary school tuition, for example. Nevertheless, both the IRS and state governments offer tax breaks that will help defray some of your expenses. More generous tax breaks are available if your child is in college.
Many state governments offer various tax benefits for educational expenses. Minnesota, for example, offers state tax breaks for textbook expenses, driver education instructor fees, all-day kindergarten fees and college tuition. Limitations apply to some of these deductions -- religious textbooks, for example, are not eligible for tax breaks. Illinois offers an education expense credit that applies to kindergarten, primary school, middle school and high school student expenses.
If your child is under 13 and the private school offers before- and after-school care, you may claim the child care tax credit for your expenses, limited to a maximum of $3,000 per child. You can even deduct some of the cost of a private kindergarten if you pay separate fees for an educational component and a child care component. Remember that this is a credit, not a deduction -- you deduct it directly from your tax bill, not your taxable income.
If you invest in an education savings account and name a beneficiary for the account, your contributions are tax-free until you withdraw them. Even when you do withdraw the funds, they are still tax-free as long as they don't exceed the qualified educational expenses of your beneficiary. You are ineligible for this program if (as of 2012) your adjusted gross income equals or exceeds $110,000 -- or $220,000 if you are married and filing jointly. Although you can establish as many ESAs as you like, your contributions are limited to $2,000 per tax year per beneficiary.
The American Opportunity Tax Credit, which replaced the Hope Tax Credit, offers a credit of up to $2,500 in tuition, books and certain other expenses if your child is enrolled at least half-time in college. The Lifetime Learning Credit offers a credit of 20 percent of the same expenses, for a maximum credit of $2,000 per year. The Lifetime Learning Credit cannot be used by taxpayers whose modified adjusted gross income exceeds $61,000 per year, or $122,000 if you are married and filing jointly (as of the 2011 tax year). The American Opportunity Tax Credit applies no matter what your income. You can't use both of these credits for the same child during the same tax year.
- Forbes: 9 Tax Tips for Back to School
- Mefford Delong LLC: Minnesota K-12 Back-to-School Tax Tips
- IRS: Coverdell Education Savings Account (ESA)
- IRS: Publication 503--Child and Dependent Care Expenses
- IRS: Publication 970 (2011), Tax Benefits for Education
- Internal Revenue Service: Lifetime Learning Credit
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