@Andreea12 wrote:
What if she's 2 years old? She's not of elementary age. It's a Montessori school for toddlers.
If you pay for child care so that you (and your spouse if married) can work or attend school full time, you can claim the Child and Dependent Care tax credit. For children under kindergarten, preschool tuition is eligible even if there is also an educational purpose. For kindergarten and higher, your costs are only eligible if you pay extra for before- or after-school care to cover the extra time between school hours and your work, and if that extra cost is itemized on your bills.
If you or your spouse has a child care flexible spending arrangement available as an employment benefit, you can contribute up to $5000 from your paycheck and then pay your tuition from the flex account. This gives you a larger tax benefit than the Child and Dependent Care Credit if your income is more than $35,000 per year.
If you don't work, or if you are married, if only one spouse works, you can't use the Child and Dependent Care Credit or the flexible spending account for any kind of child care costs.
Additionally, there is a new tax benefit for tuition expenses at kindergarten and higher. Parents can contribute to a state 529 education account and withdraw the money to pay qualified tuition expenses of K-12 education as well as college expenses. Contributions to a 529 plan are not tax deductible on your federal return but may be tax deductible on your state return, and the income gains in a 529 account are not taxable as long as the money is used for qualified education expenses for the account beneficiary (your child). Read more here.
https://www.irs.gov/publications/p969
While your child is too young to use a 529 account to pay for Montessori, you could start contributing to an account to use the money when she enters kindergarten, if you plan to keep her in private school (or to save for college).
