Daycare/School tax deduction

[Andreea12]

Is there a daycare/Montessori School childcare deduction? If so, how do I navigate on TT? Thanks!

[GuodaL]

Hi Andreea12,

That is a good question. 

You may be eligible to claim the child and dependent care credit if:

You paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing a joint return) to work or actively look for work.
You (or your spouse if filing a joint return) lived in the United States for more than half of the year. However, special rules apply to military personnel stationed outside of the United States.

Here is a good article to read on this topic.

https://turbotax.intuit.com/tax-tips/family/deducting-summer-camps-and-daycare-with-the-child-and-de...

The way to enter the daycare expense can be done by following the steps here:

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/get-child-depende....

Hope this answers your question. If you have any follow up questions, feel free to respond here.

[Kearbie]

Hello Andreea12 

Thank you for your question. It is possible that you would qualify for the child and dependent care credit. This credit does have certain criteria that must be met in order to claim this credit. 

Tests you must meet to claim a credit for child and dependent care expenses.

To be able to claim the credit for child and dependent care expenses, you must meet all the following tests.

1. Qualifying Person Test. The care must be for one or more qualifying persons who are identified on Form 2441. 

2. Earned Income Test. You (and your spouse if filing jointly) must have earned income during the year. 

3. Work-Related Expense Test. You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work.

4. 1. Your spouse, or

   2. The parent of your qualifying person if your qualifying person is your child and under age 13.

      You must make payments for child and dependent care to someone you (and your spouse) can't claim as a dependent. If you make payments to your child (including stepchild or foster child), he or she can't be your dependent and must be age 19 or older by the end of the year. You can't make payments to: 

      1. Your spouse, or

      2. The parent of your qualifying person if your qualifying person is your child and under age 13.

5. Joint Return Test. Your filing status may be single, head of household, or qualifying surviving spouse. If you are married, you must file a joint return, unless an exception applies to you. 

6. Provider Identification Test. You must identify the care provider on your tax return. 

7. If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if you had one qualifying person or $6,000 if you had two or more qualifying persons) in order for you to claim a credit on the remaining amount. (If you had two or more qualifying persons, the amount you exclude or deduct will always be less than the dollar limit because the total amount you can exclude or deduct is limited to $5,000)

And as with most IRS regulations there are exceptions and explanations for the Child and Dependent Care Credit so for the complete rules please see IRS publication 503

 https://www.irs.gov/publications/p503#en_US_2021_publink100048433

Please use this link for step by step directions on how to enter the Child and Dependent Care Credit into TurboTax: https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/get-child-depende... 

Hope this helps,

Kearbie

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[KarenJB]

Hi @Andreea12 , thanks for your question!

Private school below the college level is generally not tax deductible, unless your child has a special need; in that case, with a physician referral, the cost of a private school could qualify as a deductible medical expense. However, in order to claim that, you would need to itemize deductions, as opposed to taking the standard deduction. If you are using the TurboTax program, you can would enter that expense under Deductions and Credits/Medical.

As far as child care is concerned, the amount allocated toward daycare may qualify toward the child and dependent care tax credit.  To claim the credit, you and your spouse (if married) must have income earned from a job and you must have paid for the care so that you could work or look for work. You can claim from 20% to 35% of your care expenses up to a maximum of $3,733 for one child, or $6,164 (tax year 2023 amounts) for two or more children. To claim that credit on your return if using TurboTax, please go to Deductions and Credits/You and Your Family/Dependent Care Credit.

Please see the following links for more detailed explanations:

https://turbotax.intuit.com/tax-tips/college-and-education/tax-tips-when-sending-kids-to-private-or-...

https://www.irs.gov/taxtopics/tc602

https://turbotax.intuit.com/tax-tips/family/the-ins-and-outs-of-the-child-and-dependent-care-tax-cre...

[Terri Lynn]

Thanks for the quesiton, Andreea12!

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@Andreea12 wrote:

"Is there a daycare/Montessori School childcare deduction? "

---

  A Montessori school is considered to be a "private school" and generally, the cost of tuition for private school for elementary and secondary school students is not tax deductible.on your federal tax return   

However, a  portion of the private school tuition fees, if it relates to child care services, may qualify as child care costs, but you will need your receipt from the school specifying how much of  the  cost were attributable to chilc care. (Usually preschool or pre Kindergarten only, qualify)

 Also worth considering, some states do offer families tax relief for K–12 private school expenses.

Alabama, Illinois, Indiana, Iowa, Louisiana, , Minnesota, Ohio, South Carolina and Wisconsin offer private school choice programs, known as individual tax credits and deductions. Many taxpayers are able to claiim these and save anywhere from a $100 to $10,000, depending on where they live.  So you may want to check  with your individual State taxing authority to see if they offer any of these types of programs. 

Please reach back out, if you have any additional questions or concerns.

[Andreea12]

What if she's 2 years old? She's not of elementary age. It's a Montessori school for toddlers.

[GuodaL]

Hi Andreea12,

You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who isn't able to care for himself or herself. The credit can be up to 35% of your employment-related expenses.

Hope this answers your question. Feel free to reply if you have any other questions.

[Kearbie]

Hi Andree12, 

Yes pre-school expenses do qualify for the credit as long as you meet the other requirements. 

Please let me know if you have additional questions,

Kearbie

[xmasbaby0]

@Andreea12 If your toddler is attending school so that you can work, you may be able to get the child and dependent care credit.   If the child is merely attending school for the socialization, enrichment, etc. and you are not working while the child is at school, there is no federal tax deduction.  You simply have a personal expense.

https://ttlc.intuit.com/questions/1900643-what-is-the-child-and-dependent-care-credit

[Opus 17]

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@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).

[Terri Lynn]

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@Andreea12 wrote:

What if she's 2 years old? She's not of elementary age. It's a Montessori school for toddlers.In

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 In this case, it is possible that the Montessori fees can be interpreted as childcare expenses so they can qualify you for the dependent care credit, providing  the school provides you with a receipt, specifying these expenses were incurred for child care and not tuition,and all other necessary qualifications are met. 

 For additioal information on the Dependent  Care Credit check out this article:

The Ins and Outs of the Dependent Care Credit. 

Hopefully that helps!

Thanks and  please reach out if you have any aditional questions.

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[Opus 17]

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@Terri Lynn  wrote:

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@Andreea12 wrote:

What if she's 2 years old? She's not of elementary age. It's a Montessori school for toddlers.In

---

 In this case, it is possible that the Montessori fees can be interpreted as childcare expenses so they can qualify you for the dependent care credit, providing  the school provides you with a receipt, specifying these expenses were incurred for child care and not tuition,and all other necessary qualifications are met. 

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Expenses to provide care for a child under kindergarten are eligible for the credit even if there is also an educational purpose.  The taxpayer does not need a statement proving that the expenses are not "tuition."

Pub 503: "

Education.

Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care."