Posted by Fletcher Accounting and Tax Service Inc.

Are Private Tuitions Tax Deductible

Are Private Tuitions Tax Deductible

Sending your child to a private school can have many benefits, but when you write this considerable number of tuition check each year, you may wonder whether these payments are deductible.

Private education can go from kindergarten to higher school and costs parents a fee. Although the federal government grants in some cases a tax exemption for enrollment in private schools, deductions are not widely available at all levels. The Internal Revenue Service publication 970 provides an overview of the different types of tax exemptions for private tuition, although these are not specific tax deductions. It is advisable to consult a tax advisor before declaring a deduction.

Unfortunately, for US federal taxes, The short answer is no. If your child attends a private elementary school and a secondary school, there is no federal deduction or tax credit that will help pay the tuition, not even school uniforms. However, once the child has graduated and goes to a university for which he or she has paid, he/she will start receiving certain school deductions. Until then, there are not many tax cuts to reduce costs.

This does not mean that you are not lucky if you need help to finance your private studies. Some states (Alabama, Arizona, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, New Hampshire, Oklahoma, Pennsylvania, Rhode Island, South Carolina, and Virginia) provide tax credits to organizations who make provision for tuition in private schools in the form of scholarship

Businesses and individuals can also send a percentage of the state taxes they owe to these organizations as an alternative to the school voucher programs. Typically, organizations are set up to pay low-income children whose family income is below a certain threshold to attend a private school.

Although there are no direct tax credits for tuition fees in private schools, there is a way by which the IRS facilitates the payment of tuition fees. Parents or guardians can create a Coverdell Education Savings Account (ESA) to save future education expenses without generating taxes. Coverdell ESA is a trust account created exclusively to pay the designated beneficiary's tuition fees. They look like a Roth IRA in which the money is invested in mutual funds, stocks and bonds and both allow for annual tax-free contributions.

Although it is limited to $2,000 a year, it is tax-exempt, and its withdrawals comply with specific guidelines. Deposits must be in cash and can be made until the beneficiary is 18 years old. The money can be used up to 30 years (after which taxes and penalties will be applied).

If you are interested in developing an account for a particular child, you do not have to claim your child as an employee. This means that grandparents, uncles and aunts can continue to help raise a child. You can even fund an existing Coverdell ESA, provided it does not exceed the $2,000 annual limit.

State Tax Reductions

Some states grant families tax exemptions for private primary and secondary education expenses.

Alabama, Illinois, Indiana, Louisiana, Iowa, Minnesota, South Carolina and Wisconsin offer private school choice programs called tax credits and individual deductions. 

Every year, hundreds of thousands of taxpayers claim these state loans, and you can save between $100 and $10,000 depending on your country's programs. The exact amount you earn depends on where you live.


Alabama Accountability Act of 2013 Refundable Tax Credits for Parents and Taxpayers

Who is qualified to use it: Parents with children in failed schools may apply when transferring students to certain non-failed schools.

Average value: $2,814. This represents less than 80% of the annual cost of public support for primary and secondary education or the actual cost of raising children.


Illinois tax credits for education expenses

Who can use it: All families who pay taxes with children who spend to send their children to a private school are eligible throughout the state. Family educators can claim education fees of over $250 a year if they are parents/guardians, parents and students residing in Illinois when fees have been paid, and the student attends a school that complies truancy law.

Average value: $ 262. 25% of authorized costs after the first $ 250, but will not exceed $ 500 in one year.


Indiana Private School Deduction

Who can use it? The eligible child must be able to apply for parent/guardian fees and be eligible to receive a public education from kindergarten to grade 12 in an Indiana school society. The child must fulfil the mandatory participation requirement. 

Average value: $1,804. You can claim up to $1,000 per employee.


Courses and tax credits for textbooks

Who can use it: All families who pay taxes with children who spend to send their children to a private school are eligible throughout the state. Only the spouse who needs maintenance can apply for credit. 

Average value: $130. The value of 25% of the first $1,000 paid for each employee by conferences and manuals.


Teaching deduction at elementary and high school in Louisiana

Who can use it: All primary and private high school students in Louisiana are admitted. 

Average value: $5,448. The deduction can reach $5,000 per employee. Parents can claim up to 100% of tuition fees paid per student per year.


Minnesota educational deduction

Who can use it: Any parent or guardian who spends money on approved tuition can benefit from the deduction. The qualified child must go to school in MN, IA, ND, SD or WI.

Average value: $1,145. The tax deduction is 100% of the amount spent on education, up to $1,625 for the K-6 grade and $2,500 for the 7-12 grade.

Minnesota K - 12 credits of study

Who can use it? The tax credit is being phased out for taxpayers earning over $33,500. The maximum credit limit is reduced for income above this amount, depending on the size of the family.

Average amount: $254. A refundable credit is available for 75% of the amount spent on education expenses beyond schooling, up to $1,000 per child.


South Carolina Refundable Education Credit for Children with Special Needs

Who can use it: Parents of students designated by the Ministry of Education as a "disabled child". Even students who have been diagnosed with acute or chronic illness in the last three years, which significantly impede the student's ability to succeed in school (i.e. deafness, blindness, orthopaedic deficiency, neuro-developmental disability, etc.) are eligible. Also, parents should believe that the public school district does not meet the student's needs and that the student should attend an independent school.

Average value: $6,211. a value below (1) $11,000 per student or (2) the actual cost of your children to attend school.


Wisconsin K - 12 Deduction for a course in a private school

Who can use it: Any taxpayer in Wisconsin who pays for private tuition for your child is entitled to this deduction. Find out if they are fit.

Average value: $ 4,839. The deduction can reach $ 4,000 per elementary and secondary child and $ 10,000 per child in elementary and secondary school.


 Tuition fees for private schools are not deductible from federal income tax (tax exemptions for private schools and parish schools may be available in each state).

But if you scratch your head because you're sure you've already seen something about private education in the tax reform project, make no mistake. Prior to the tax reform, neither the profits nor the distributions of a 529 plan would be subject to federal taxes, provided that the plan is used for university-related costs, such as tuition and housing costs, as well as only for taxes, books, supplies and equipment. As part of the tax reform, covered expenditures were extended to $10,000 per pupil for public, private and religious primary and secondary schools.

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