I sent my youngest child, Ryan off to his first day of high school and my oldest son, James is celebrating his 16th wedding anniversary. I bet not many people can say that. With school starting, I have had several calls regarding tax strategies. I recently posted a blog about college credits and deductions. If you have a child in post- secondary or you or your spouse are headed back to school, you should check out that blog. Here is some other information about education:
1. School uniforms are not deductible, no matter how ugly they are. The IRS does not allow deductions for school uniforms, even if required, for public or private schools.
2. The cost of private school is not deductible. This includes both traditional private and parochial schools, though exceptions apply in some circumstances such as for special needs children and when it serves as child care.
3. The cost of private kindergarten – and some upper grades for students up to the age of 13 – may be deductible. Okay, I know I just said that the cost of private school is not deductible. And that’s generally true for tuition costs. However, if you can separate the educational costs of your program from any child care component, you may be able to deduct the child care piece. Clearly, this is easier for younger children since many programs are already separated out for you (half day kindergarten, for example, is often supplemented by a child care program in the afternoons).
4. Expenses for before-or after-school care of a child in kindergarten or a higher grade may be deductible as long as the costs qualify. Generally, qualifying costs for child care are limited to the care for your own children under the age of 13, qualifying as your dependents, for care while you work or while you are looking for work. Some cost limitations and other restrictions may apply.
5. You must subtract the cost of goods received when you contribute to band and sports fundraisers. Yes, I’m talking about the popcorn, Christmas wrapping and scented candles. Inevitably you feel obligated into buying stuff. In my case, I don’t feel comfortable asking friends and neighbors to buy stuff, so I just buy more. I now have enough Christmas wrapping to last me for the rest of my life and if food becomes scarce, the Kopsa family will be living on popcorn (if the microwave still works). There is no, or little to no tax deduction since the IRS requires you to subtract the value of anything you receive in return for a charitable donation.
Better solution: Just write a check directly to the school. In this case, the school gets to keep the entire amount and you take the full donation…unless, of course, you need more scented candles.
6. You may not deduct moving expenses for heading to college. I get asked this question quite a bit, but the answer is still no, year after year. The IRS doesn’t consider going to school a job.
7. The earnings in 529 plans are not taxable for federal purposes. A 529 plan is an education savings plan which takes its name from section 529 of the Internal Revenue Code. Investments in these plans grow tax-free and withdrawals are never federally taxable so long as you use them for eligible college expenses, which includes most costs associated with college such as tuition and room and board. The plans vary from state to state and there are entire web sites and publications devoted to them.
If you have any school-related questions, send them to me. Remember that you can email them, ask me on twitter or post a question on Facebook.
1. School uniforms are not deductible, no matter how ugly they are. The IRS does not allow deductions for school uniforms, even if required, for public or private schools.
2. The cost of private school is not deductible. This includes both traditional private and parochial schools, though exceptions apply in some circumstances such as for special needs children and when it serves as child care.
3. The cost of private kindergarten – and some upper grades for students up to the age of 13 – may be deductible. Okay, I know I just said that the cost of private school is not deductible. And that’s generally true for tuition costs. However, if you can separate the educational costs of your program from any child care component, you may be able to deduct the child care piece. Clearly, this is easier for younger children since many programs are already separated out for you (half day kindergarten, for example, is often supplemented by a child care program in the afternoons).
4. Expenses for before-or after-school care of a child in kindergarten or a higher grade may be deductible as long as the costs qualify. Generally, qualifying costs for child care are limited to the care for your own children under the age of 13, qualifying as your dependents, for care while you work or while you are looking for work. Some cost limitations and other restrictions may apply.
5. You must subtract the cost of goods received when you contribute to band and sports fundraisers. Yes, I’m talking about the popcorn, Christmas wrapping and scented candles. Inevitably you feel obligated into buying stuff. In my case, I don’t feel comfortable asking friends and neighbors to buy stuff, so I just buy more. I now have enough Christmas wrapping to last me for the rest of my life and if food becomes scarce, the Kopsa family will be living on popcorn (if the microwave still works). There is no, or little to no tax deduction since the IRS requires you to subtract the value of anything you receive in return for a charitable donation.
Better solution: Just write a check directly to the school. In this case, the school gets to keep the entire amount and you take the full donation…unless, of course, you need more scented candles.
6. You may not deduct moving expenses for heading to college. I get asked this question quite a bit, but the answer is still no, year after year. The IRS doesn’t consider going to school a job.
7. The earnings in 529 plans are not taxable for federal purposes. A 529 plan is an education savings plan which takes its name from section 529 of the Internal Revenue Code. Investments in these plans grow tax-free and withdrawals are never federally taxable so long as you use them for eligible college expenses, which includes most costs associated with college such as tuition and room and board. The plans vary from state to state and there are entire web sites and publications devoted to them.
If you have any school-related questions, send them to me. Remember that you can email them, ask me on twitter or post a question on Facebook.
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