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Ask the taxgirl: Private school tuition

February 25, 2008 · 14 comments

Taxpayer asks:My daughter attends an independent private elementary school. We pay around $10,000 a year in tuition. Is it deductible?

Taxgirl says:

Thanks for writing.

This is actually one of my pet peeves in tax policy. You don’t get a break for paying for private school tuition: if you pay for private or parochial school, no deduction.

Expenses for a child in nursery school, pre-school, or similar programs for children below the level of kindergarten are deductible if they otherwise qualify as child care. However, there is one potential break with respect to kindergarten and older grades: if you can separate the educational costs from the child care component, you may be able to deduct the child care piece. Additionally, expenses for before- or after-school care of a child in kindergarten or a higher grade at a private school may be deductible so long as the costs qualify. For more information about qualifying child care expenses, click here.

I’ve gone on record before as saying that I believe that this is bad public policy. It encourages parents to weigh the “cost” of education versus child care. For example, since I can keep my child out of school in the state of Pennsylvania until the age of 8 (!), if I paid for private childcare at home instead of school while I worked, that would be deductible. If I send my child to private school, that cost is not deductible.

Also curious, Romney had suggested a federal tax credit for homeschooled children – nothing for children who go to private school. That, however, is not current law.

If you’re interested on reading more about this issue, my prior post about why I think this is bad policy – and why being middle class in America sucks – was one of my highest commented posts last year. You can check it out here.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the Taxgirl!

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{ 9 comments… read them below or add one }

1 HSwift February 25, 2008 at 10:09 pm

I did a little research on this topic and found an opinion that stated if we could deduct private school tuition then people would be flocking to private schools and the public school system would lose money. The govt doesn’t want to do that to their schools. I guess a deduction would be akin to the voucher system. I wonder if vouchers have hurt the public school system where it is in practice now.

Aren’t there education IRAs? Can you put money in one pre-tax and then take it out eg. for private high school?

2 Kelly February 25, 2008 at 11:04 pm

I personally don’t think that folks would flock to private schools for a small tax credit… And my issue is one of priorities (addressed previously here: http://www.taxgirl.com/being-middle-class-in-america-sucks/#comment-2550)

To answer your question, you can establish a Coverdell ESA (more or less an educational IRS) but it really doesn’t work out financially. You can’t establish one until you have a beneficiary and the max contribution level is, I believe, $2k. So assuming that you start with a newborn and contribute $2k each year, you may have enough to pay for two years by the time the child is ready to graduate. And depending on the plan, the fees may be prohibitive for short term contributions.

3 Another Tax Geek February 26, 2008 at 11:36 pm

I’ve always supported the voucher system. Gov’t is most efficient (crazy idea, right?) when it has competition, and vouchers provide that. But to carry your point one step further, you’re essentially wanting to only pay for school once, where you choose. I don’t have any kids, how about if I get a tax break too, and instead, schools are funded by taxing the parents of the users?

4 Kelly February 27, 2008 at 7:32 am

Actually, that’s not true, ATG. I don’t mind paying taxes for public schools now, and I didn’t when I had no children. I have two children not in school and I don’t think I should get a “break” for those at all. I don’t think there should be an exemption for folks who don’t have children in public school any more than I think folks with more than one child should pay more. I believe that education is an important aspect that affects everyone, kids or no.

And a tax break/credit for private school would be no different than what is allowable for college tuition. The break/credit wouldn’t hurt anyone – a small credit for tuition (esp when tuition is usually upwards of $10k/year) isn’t the same as all thing being equal with a parent whose kids are at public school.

My beef is more of a policy argument. In PA, I don’t have to send my child to school until age 8. I chose to send my child to school at age 4. The government is willing to give me “credit” for having a babysitter watch my children, but not for private school. What kind of priority is that?

Similarly, if I move to a more expensive home in another school district, I can get a tax credit for the money that I would spend on the new home. Why is it ok to subsidize my move but not education? When folks talk about private school tuition tax breaks causing mass flight, they’re misguided. It’s already happening and it’s subsidized by the government: it’s call the home mortgage interest deduction.

As for vouchers, I’m not a big fan. Most of the programs that are in place would essentially “equalize” all schools in terms of costs which sounds really lovely (other countries do it) but our economy is so disparate from rural to urban and other demographics that most of the voucher proposals would only benefit a handful.

I realize that I am lucky to be able to send my child to private school – and it has not been easy (we have made other cuts in order to afford it). And I’m not looking for a handout. But from a tax policy stand point, I don’t understand subsidizing mortgages, babysitting and under Romney’s proposal, homeschooling, while overlooking private school.

5 PriyaGuttal March 25, 2008 at 10:00 am

Hi! I have a question. Is the tuition for private, special education school tax deductible?
Thank you.
Priya

6 Jennifer February 15, 2009 at 4:27 pm

I’m so upset, i can’t believe there isnt any tax breaks for sending my child to private school! We don’t burden the state with adding another child in their sometimes, messed up system…yet we still are expected to pay taxes toward the public school system, we dont use!! And now they talk about offering vouchers/scholarships to kids who attend public schools that are failing. It sometimes feels like it pays to not work and just use the system!

7 Dallas September 4, 2010 at 7:37 am

Is there an IRS penalty to parents for not declaring tuition discounts for services in a private PA elementary/secondary school? In other words, is there a law against a person who cannot afford full tuition and fails to declare reduced tuition amounts for custodial services they did for the school? Also, is the school liable for reporting the tuition reduction?

8 Carol July 24, 2011 at 10:02 pm

Is there a tax credit to sponsor a child to go to a Private Catholic School that is not related in California?

9 Jen February 14, 2012 at 2:47 pm

What about people who home school. If I send my kids to a non-school resource center a few days a week while I work is that deductible? It’s not a school and they receive no credits for attendance but it is during “school” hours.

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