People already know college tuition is an expensive investment and when you calculate your child’s education expenses from diapers to diplomas it turns out to be pretty pricey. Sending your little Einstein to preschool isn’t cheap either — depending on where you live and the quality of the school — the bill could look comparable to a semester at a state university. With April 18 just a few days away, some may be scrambling to get the best refund and might question: Can I claim preschool costs on my taxes?
Simply answered, yes you can, as long as the reason your child attended preschool was in order to get child care while you worked.
Officially, however, preschool is not a deductible expense for the education credits and deductions. But, expenses for children below the level of kindergarten are deductible if they are enrolled in nursery school, preschool, or other similar programs. So, you’ll need to find out if your child’s preschool fees qualify for the child and dependent care credit, or if they otherwise qualify as "child care."
In an interview with CNBC, Bob Meighan, Vice President of Customer Advocacy at TurboTax said most people aren’t aware of this credit and often don’t take advantage of the tax breaks they are eligible for.
“If you paid to have someone care for a child who is under 13 years old so you can work or go to school, you may be eligible for this credit, worth as much as $2,100,” Meighan from TurboTax told CNBC. “You could also use this credit to claim as much as 35 percent of child care expenses, up to $1,050 for one dependent or $2,100 for two or more dependents.”
Here’s a detailed checklist to see if your kids will qualify you for the credit:
- Your child must be 13 years-old or younger at the end of the tax year.
- You must be legally responsible for your child you are claiming, this includes stepchildren, foster children, and adopted children.
- You financially supported more than half of your child’s expenses during the tax year.
- You claimed your child as a dependent on your tax return.
- Your child is a U.S. citizen (a U.S. national or a U.S. resident alien also qualify).
- Your child lived with you for more than half of the tax year for which you are claiming the credit.
- Your family income was under $55,000 (for married couples filing separately), $75,000 (for single, head of household), $110,000 (for married couples filing jointly).
You and your child must pass all seven requirements to claim the child and dependent care credit. If you’re a bit off on the family income requirement, there is a little wiggle room with it — for each $1,000 of income over the requirement, the credit will be reduced by $50. That’s not too bad though, considering this credit can reduce your tax bill by as much as $1,000 per child. It was created to benefit working families after all.
If you’re able to check off all seven requirements, then you should have no troubles (hopefully) claiming your child’s preschool costs on this year’s taxes. Of course, remember to fill out and attach the official tax form, otherwise you'll get nothing.
Take hard look at your finances and buckle down with your accountant (or your handy laptop) and see if this tax break will work in your favor. With the cost of preschool averaging around $8,800 a year ($733 a month), you’ll probably want to find every tax break possible so that can put less stress on your budget and mind when considering education options for your tot’s future.