If you send your children to private school, it can amount to a hefty bill each year. The IRS commiserates with you to some extent, but it can be stingy with its available deductions for education-related expenses. Depending on how much you earn, you may not be eligible for these tax perks at all.
Kindergarten, Elementary and High School
As a general rule, tuition you pay for private or parochial school is not deductible if your children are attending kindergarten through twelfth grade. This is a choice you've elected, rather than sending them to a public school, and the IRS offers no tax breaks for it.
Special Needs Schools
An exception exists for special needs children who must attend a certain school for therapeutic or health care reasons. This isn't actually a tuition deduction. It's a medical deduction, and your child's physician or another licensed health care professional must prescribe your child's attendance at the school.
To take advantage of this deduction, you must itemize deductions rather than use the standard deduction. Depending on your circumstances, claiming these tuition costs might not actually be an advantage. They'd have to exceed 7.5 percent of your adjusted gross income, and you can only deduct the difference. In 2019, the amount rises to 10 percent of AGI. For 2018, if your AGI is $175,000, your tuition costs would have to exceed $13,125, or 7.5 percent of that. If tuition was $25,000, you could deduct $11,875, which is slightly less than a standard deduction for married couples filing jointly. If you had no other itemized deductions you could claim, it might make more sense to take the standard deduction.
If your children also attend before- or after-school daycare programs, this portion of your expense might cut your tax bill. If you can distinguish between what amount of your overall bill is tuition and what constitutes child care, the latter might qualify you for the Child Care Tax Credit. If you're married, both you and your spouse would have to work and earn income, unless one of you is disabled. Your children must be younger than 13, and they must enroll in the program to allow you and your spouse the freedom to work or look for a job. Low-income families are eligible for credits equaling 35 percent of these costs, up to $3,000 for one child or $6,000 for two or more children. Unfortunately, the value of this credit phases out at higher incomes.
The situation changes significantly if your children are attending college. You can deduct qualified education expenses – including tuition – for your dependents' higher education costs, up to $4,000. You can take this deduction even if you don't itemize deductions on Schedule A. If you're married, you must file a joint return to qualify. According to the IRS, this deduction is most beneficial for those families who don't qualify for the American Opportunity Credit or Lifetime Learning Credit. Unfortunately, like other educational tax benefits, this deduction also phases out at higher incomes, and if your modified adjusted gross income is more than $160,000, you're not eligible at all.
Though these are tax credits and not deductions, the IRS also offers the American Opportunity Credit and the Lifetime Learning Credit to parents paying college tuition for their dependents. Unfortunately, you can take only one – and if you take one of these credits, you may not take the tuition deduction as well. The American Opportunity Credit is worth up to $2,500 per student, but it also phases out for parents whose combined modified adjusted gross income exceeds $160,000. The Lifetime Learning Credit is worth up to $2000 per student, but parents' combined MAGI must be less than $132,000.
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