In life, there are expenditures you need to deal with because they are worth more than investment, including your child’s education. But do you wonder if preschool fees are at least tax-deductible?
Paying preschool fees and tax
No doubt, early childhood education is vital for kids. Preschool, for instance, empowers young students to explore learning styles and adopt skills through fun-filled learning activities and sessions. Parents also find reliable child care support when entrusting their kids to an institution like Rainbow Preschool and Child Care Center.
According to several studies, enrolling a child at a quality preschool offers a long-lasting impact. These include academic advancement, improvement in behavior, and developing a fondness for lifelong learning. The thing is, in reality, most quality education requires fees. And it is practical for any parents to look for ways to find ease in paying tuition fees.
The good news is that the federal tax authority or IRS recognizes the importance of child care. It also honors parents or guardians who need to work to support their dependents through giving credits when they opt to pay for child care assistance. The aid includes short-term day camps and full-year preschool programs as laws acknowledge it as part of childcare.
Tax deduction or credit?
Preschool fees are generally not tax-deductible from a parent’s taxes. The good news is this can apply as a child and dependent care credit. Either of the two lessens your tax bill, but one is more advantageous than the others.
If you are not aware, a tax credit can significantly reduce your tax since it directly applies to your total bill. For example, you can claim a tax credit worth $738. It is the exact amount you can diminish from your total tax bill. However, if $738 is a tax deduction, that can lower your taxable income. In that sense, tax deduction can only make a difference depending on your income or other factors. Given the examples, a tax credit is beneficial as it offers a dollar for dollar deduction to your tax bill.
Child and Dependent Care Credit
The child and dependent care credit are $1,050 for one kid, while it’s $2,100 for two or more young ones. This amount is helpful enough to lessen total preschool or child care costs in a year.
To qualify for the tax credit, you, as claimer or payer, must:
- Prove your young student is your qualified dependent. IRS also requires that a child lives with the taxpayer for at least six months within the taxable year.
- Your child is 13 years old or below within the tax year.
- You are a breadwinner of the household, single, married filing jointly, or widow or widower with an eligible dependent(s).
- Confirm you need help to support your child so that you can search for a job or continue working. Additionally, the IRS will check if the claimer paid tuition fees to an individual or school where the dependent study.
To learn more about possible preschool expenses, talk to us at Rainbow Preschool.