Child Dependent Care - How to Correctly Claim Tuition for Private Preschool

[wkkunkle]

Hi Everyone!

I am hoping for some confirmation that I am understanding this correctly and I enter it all into TurboTax properly.  I appreciate any feedback or guidance.

My daughter was in pre-kindergarten (preschool) starting this past year (school year 2024-2025).   My wife and I both work full-time, so based on my understanding, we can claim this preschool tuition on our taxes as a credit as the IRS sees anything before kindergarten as a child care experience.

We paid the full tuition all at once in 2024 but publication 503 (Child and Dependent Care Expenses) states:

Expenses prepaid in an earlier year. If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Claim the expenses for the later year as if they were actually paid in that later year.

Based on this, I am assuming I need to divide the total tuition by number of months and enter it accordingly.  So, for example, if the school year is 9 months (Sept 2024 - May 2025) and I paid $5,000 for the year, I would divide $5,000 by 9 months (so ~$556 per month) and enter only $2,224 in TurboTax on the "total dependent care expenses" line for my daughter and the "total paid to this provider in 2024" (even though I actually paid $5,000 in 2024 but it covered 5 months of "care" in 2025, in addition to the 4 months of "care" in 2024).

Assuming this is correct, next year when I file taxes for Tax Year 2025, even though my daughter will be out of preschool at that point, provided my wife and I are both still employed full-time, we could list that we paid the provider $2,776 in 2025 (for the remaining amount I had paid in 2024 as part of the full tuition for the school year) - even though I didn't actually pay the school anything for her that year?  Am I understanding this correctly?

I'm just having a hard time wrapping my head around claiming the additional money for January - May 2025 next year when I paid the full amount in 2024 and I won't actually pay them anything for my daughter in 2024.

I don't need the IRS coming after me because I screw this up due to misunderstanding, haha.

Thank you in advance for your help!

[Opus 17]

On your 2025 return you would report the expenses that you pre-paid in 2024 as if they were paid in 2025 when the care was received ($556 per month), but only as long as the care was actually received and you still qualify.  For example, if you stopped qualifying in April because you left work to be a stay at home parent, then you could only claim the expenses up to the point where you stopped qualifying, even if you did not get a refund. 

The first part of what you quoted means you only claim 4 months on your 2024 return even though you paid 9 months, and the second part of the quote means you claim the other 5 months on your 2025 return because that's when care was provided,, even though it was paid in 2024. 

[wkkunkle]

Thank you.

So provided nothing changes with eligibility, my example as to how to enter data for 2024 tax year and then 2025 tax year would be correct, right?

[MaryK4]

Yes, your entries will be correct. @wkkunkle