Can I Claim Expenses for Preschool as a Tax Deduction?

By: Craig Woodman

While it's not a deduction, the U.S. tax code allows you to get some assistance with your expenses for childcare in many cases, including the money you pay for preschool. Depending on your income, you can claim a tax credit for up to 35 percent of your preschool expenses, up to $3,000 for one child or $6,000 for two or more children, applied directly, dollar-for-dollar, to your taxes owed for the year.

Qualifying Person

Tax credits on preschool expenses must be for a qualifying person. This is generally your own child, natural born or adopted. Foster children, grandchildren, and other relatives also qualify, if you claim the person as an exemption on your income tax return. To qualify, the child must have lived with you for over half the year, and you must provide over half of her financial support.

Earned Income

To claim the child and dependent care credit, you must have earned income for the year you're filing for. If you're married, your spouse must also have earned income. The credit enables you and your spouse to both work, earn income and pay additional taxes. If your spouse doesn't work, and you send your child to preschool for educational purposes only, you aren't eligible for the credit.

Income Tax Filing Status

You may claim the credit if you are filing as single head of household with a qualifying child, or married filing a joint return. If you are married and file separately, you are generally prohibited from claiming the credit, unless you meet certain conditions. If married filing separately, you qualify for the credit if you are under a court order of legal separation or separate maintenance. If you are not under such an order, file separately, and live apart from your spouse, you can still qualify for the credit if you meet certain conditions. You must pay over half of the cost of keeping up your home for the year, as well as have the qualified child live with you for over half the year. In addition, your spouse could not have lived with you for the last six months of the year.

Flexible Spending Account

Your employer may offer a flexible spending account to cover childcare expenses, which may allow you to pay for the cost of preschool expenses that would otherwise qualify for the child and dependent credit. With an FSA, your employer withholds up to $5,000 per year at your request from your paycheck pre-tax, and you supply receipts to the plan administrator to be reimbursed for your preschool expenses that would qualify for the child and dependent care credit. The FSA may have advantages for you, because this money escapes Social Security and Medicare tax as well as federal and state income taxes. If you have higher preschool expenses than the amount covered by the FSA, you may still be able to claim the credit to help offset these additional expenses up to the maximum amount allowed.

Video of the Day

Photo Credits

  • Thinkstock Images/Comstock/Getty Images

About the Author

Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.