The Internal Revenue Service (IRS) does not allow you to deduct private school tuition to reduce your federal tax liability. There is no simple federal tax credit or deduction for K-12 private education expenses. Most federal education-related tax credits and deductions are geared toward higher education and career-promoting continuing education, but there are other federal programs, such as Coverdell Education Savings Accounts, that can help parents save money on private K-12 education. If you are paying for college tuition for your children, you may be eligible for a tax credit.
Most post-high school education costs may qualify for some type of tax exemption. However, elementary and secondary school tuition and expenses do not count, with some exceptions. The credit applies to both public and private programs, but you must separate payments for before and after school care from any private tuition payments. If you are struggling to keep up with the costs of private school education, opening a 529 savings plan might be a smart decision. It is important to know what tax breaks and other deductions might be available for private K-12 education.
A 529 plan is a state program that has been around for decades to help families save for their children's future college expenses, but the federal government recently changed rules so that these plans can also be used for K-12 education, such as private school enrollment. The money parents spend from these accounts, also known as distributions, is not taxed as long as it is used for the beneficiary's expenses at a qualifying educational institution, including private elementary and high schools and public or private universities. At the state level, eight states currently offer tax breaks to families for K-12 private school expenses and a ninth (Ohio) will begin offering breaks this year. Alabama, Illinois, Indiana, Iowa, Louisiana, Minnesota, Ohio, South Carolina and Wisconsin offer private school choice programs known as deductions and individual tax credits. If you already have money in this type of account, you may also consider using it early for private school rather than for higher education expenses. You can deduct private K-12 tuition for children with special needs if such education is medically or therapeutically necessary.
Families who have not yet enrolled their children in a private k—12 school, but know they will in the coming years, can start saving on a Coverdell account in advance. Parents must also believe that the public school district is not meeting the student's needs and the student must attend an independent school. With these rules in mind, it's smart to find out if your state is following federal guidelines on withdrawals from 529 plans for private school enrollment or if they have become illegal. Knowing what tax breaks are available can help you make an informed decision when it comes to paying for your child's private school tuition.
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