Gregory Burke

Ask the Experts: Are private school costs tax deductible?

Published: Wednesday, Oct. 10, 2012 - 12:00 am | Page 7B

Can parents get a tax break for a child's private school tuition? That's the question posed to Sacramento CPA Gregory Burke, a former IRS auditor who answers federal tax questions for's "Ask the Experts."

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We recently started our son in private elementary school in the fifth grade. Do you know of any federal/ state tax income tax benefit on the monthly tuition we are paying? Is there any way we can route the payments to get federal/state income tax benefits? I heard the term "school voucher" but could not find much detail on it. Appreciate your thoughts or guidance on the subject.

Most of the education- related tax benefits – both state and federal – are targeted to college tuition and expenses.

There is no deduction for elementary school tuition. There are no tax credits for elementary school tuition payments. There are, however, two potential tax benefits available for the payment of elementary school tuition.

There is a possible exclusion from income for earnings from a Coverdell Education Savings Account (CESA) to the extent used to pay qualifying education expenses. Under current law, qualifying education expenses include elementary school tuition through 2012.

A nondeductible contribution of up to $2,000 per year can be made to a CESA. The contribution amount is subject to a phaseout if your modified adjusted gross income exceeds $95,000, with no exclusion at $110,000 ($190,000 and $220,000 if you are married filing a joint return).

Distributions, including earnings, to the extent they are used to pay qualifying education expenses, are excludable from taxable income. This provision is currently scheduled to sunset Dec. 31, 2012, unless Congress extends it.

The other potential tax benefit applies under very limited conditions for students who have a mental or physical handicap and attend a special school to treat that handicap. If the principal reason for attending the school is to alleviate the mental or physical handicap, the cost of the tuition may be deductible as a medical expense.

Medical expenses are subject to an adjusted gross income floor of 7.5 percent (10 percent starting in 2013). You will need proper documentation of the physical or mental handicap, as well as proof of the tuition payment. Again, this deduction is available only under very limited circumstances.

I am not aware of any "school voucher" programs for federal tax purposes.

However, I have seen people try to deduct tuition paid to private schools as a charitable contribution. This approach has been successfully challenged by the IRS and I do not recommend it.

– Compiled by Claudia Buck

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