As students from elementary age to grad level across the country head back to school this month, parents are grappling with how to pay tuition, buy school supplies and fit in all of those extracurricular activities. It can be difficult to figure it all out, and in an era where everyone seems to have an opinion about school (and paying for it), it can be even more difficult to separate fact from fiction. In my Back To School Myths series, I’ll help you sort out truths from myths when it comes to school and taxes. Today’s myth: You can deduct private school tuition on your taxes.
Private school tuition is not deductible. As with the inaccurately reported demise of the student loan interest deduction, this perpetually confusing myth likely got a recent boost in interest thanks to a meme that appeared earlier this year which claimed that private school tuition was made deductible as part of the tax reform bill.
(You can read more about the meme and what to consider before sharing tax and budget memes, click here.)
However, unlike the student loan interest deduction, neither of the House and Senate tax reform proposals officially tackled the deductibility of private school tuition. It was not included in any of the proposed versions, and the final version of the Tax Cuts and Jobs Act of 2017 (TCJA) did not include a deduction for private school tuition.
(You can read more about what survived the tax chopping block - and what didn’t - here.)
In other words, nothing in the TCJA changed the deductibility of private school tuition: The costs of attending private or parochial kindergarten or higher grades were not and are not deductible for federal income tax purposes.
There are two suggestions that tax professionals and taxpayers have lobbed as a way around that rule:
- Characterize them as childcare expenses. Expenses for a child in nursery school, preschool or similar programs for children below the level of kindergarten may be deductible for federal income tax purposes as part of the childcare tax credit. It’s been suggested that if you can carve out a childcare piece associated with attending kindergarten, that portion should also be deductible; you can read my take here. However, the Internal Revenue Service (IRS) takes the position that kindergarten is educational and does not qualify as childcare; you can read the applicable Regs at §1.21-1(d)(5) here. All is not lost, though: The Regs also state that “expenses for before- or after-school care of a child in kindergarten or a higher grade may be for the care of a qualifying individual.” That's true even if those expenses were paid to a private or parochial school. The other rules still apply for the credit, which means that your child must be younger than age 13. And if there’s any tuition-related piece for before or after school care, you’ll want to separate that out of the total.
- Call them charitable contributions. I am constantly asked about labeling tuition or related costs as charitable contributions. The IRS has taken a clear position that you cannot deduct as a charitable contribution amounts that you pay as tuition. This is true even if you posit that you are benefiting the school/charity with your tuition dollars or that you are taking the burden away from local government by not taking a “spot” in the public schools that you support with your tax dollars. Of course, any extra that you pay to the school above and beyond tuition may qualify as a charitable contribution; be sure to check out my tips for making your charitable donation tax-deductible here.