Preschool gives children a head start when they enter kindergarten. In an economy where both parents often hold full-time jobs, preschool is also a necessary fact of life. Preschool is a household expense for those parents and may take a significant chunk out of the family budget. To compensate, the best thing to do is look for tax deductions that will ease the burden.

Defining Preschool Expenses

Under federal tax law, tuition expenses are not tax deductible. On the other hand, the need to have qualified care for your child is recognized. For that reason, preschool costs should be considered childcare expenses – a tax deduction waiting to be claimed. This allows you to claim preschool, furthering your child’s education, as a necessary part of maintaining your household.

Federal Childcare Deductions

You are allowed to claim up to $3,000 on childcare expenses on your federal tax return. If you are claiming more than one child, the maximum allowable deduction is $6,000. According to IRS publication 503, you must file an itemized tax return, not the 1040EZ. The IRS provides free documentation for using a childcare deduction, and a handy reference guide is available.

State Deductions

If you have a state income tax, you may be able to claim childcare expenses at the state level as well. Some states, such as Illinois, also allow you to claim education expenses. Since the regulations vary from one state to another, you should consult the tax department of your state.

Deductions for Special Needs

The cost of paying for special needs education is also deductible at the federal level. This can be important as the deduction for special needs, including attention disorders, may be considered a medical expense. In this way, the cost of caring for your child may entitle you to a double deduction under the law. There are minimum costs and parameters which must be met to use this deduction. Keep in mind that this deduction applies to special needs dependents of all ages, including adult as well as preschool dependents.

Where private or parochial schools are concerned, the deduction may be affected by a number of factors, including the type of education provided. In general, education itself is not a deduction for preschool, but childcare falls into a different category. In most situations, you will need to file IRS Form 2441 to claim your preschool expenses. Enlisting the aid of a tax professional may help you locate other deductions and reduce the possibility of being audited.

Enrolling your child in preschool is beneficial for more than just monetary reasons. At Montessori Childrens Center, preschool children are encouraged to work with older students to learn new skills.  The Montessori method focuses on self-discovery and hands-on learning.  To learn more about preschool offerings at Montessori Childrens Center, call us today!

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