How to Determine if Your Preschool Tuition is Tax Deductible

You just found out how much it’s going to cost to send your child to preschool, and you’re starting to think now might be a good time to see if any of those beanie babies you’ve had stored away for years are finally worth anything.

Leave the beanie babies in the closet, because we’re going to tell you how to determine if your preschool tuition is tax deductible so you have a better way to put some money back in your pockets.

IS PRESCHOOL TUITION TAX DEDUCTIBLE?

First and foremost, you should know that preschool tuition isn’t technically tax deductible. Don’t worry though! That doesn’t necessarily mean you can’t still get some money back in your pocket. If you have a child under the age of 13 and either work, or you are looking for work you may qualify for the child and dependent care credit.

WHAT IS THE CHILD & DEPENDENT CARE CREDIT?

It’s important to note that this is not the same as the child tax credit which is a separate credit already provided to families with children. The child and dependent care credit is provided to families who need care for their child while they work or look for work.

This means that if your child is in preschool while you work, you may qualify to receive the credit. A qualifying individual may claim up to $3,000 of their expenses, and a married couple filing jointly may claim up to $6,000 of their yearly expenses.

Under usual circumstances you will be required to file jointly if you are married, and both you and your spouse will be required to be working or looking for work.

DO I QUALIFY?

In order to qualify for the child and dependent care credit you, and your spouse if filing jointly, must:

1. Have A Qualify Child

A child must be determined as your qualifying child in order to receive the child and dependent care credit. A qualifying child is under the age of 13 and lives with you for more than half of the year.

2. Have Earned Income

You must have earned income throughout the year. The following income does not count as earned income for this tax credit:

• Pensions & Annuities
• Social security benefits
• Workers compensation
• Unemployment
• Scholarships or grants
• Child support payments
• Payment received while working as an inmate
• Income of a non resident foreigner

Your spouse is considered to have earned income for any months that they were a full time student, or were physically or mentally unable to care for themselves.

3. File Jointly

If you’re married you will need to file a joint return. If you are legally separated or living apart you may qualify to file a separate return.

4. Pay A Provider

You must pay a provider to care for your child while you either work or look for work. A paid provider may not be anyone you can claim as a dependent, such as your spouse or child under the age of 19.

5. Get An ATIN

If you have a child through adoption, and you don’t have their social security number, you will need to get them an ATIN before applying for the credit.

WHAT IF I’M DIVORCED OR SEPARATED?

Even if your child isn’t claimed as your dependent, you may still qualify for the child and dependent care credit. If you are your child’s custodial parent then they can be treated as your qualifying child. The custodial parent is the parent that the child spent the most nights with out of the year.

If your child spends equal time with each parent, then the custodial parent is the parent with the greater income. Even if the non custodial parent claims a child as a dependent, they can not treat the child as a qualifying child and receive the child and dependent care credit.

For more information on how to determine if your preschool tuition is tax deductible, head over to the IRS website.