Saving money wherever possible is just part of being responsible, but sometimes necessary expenses, even large ones, come along. A preschool or Montessori preschool can certainly qualify, costing anywhere from several hundred dollars to well over a thousand dollars per month.
The expense is certainly worth it for a child’s development, as preschool improves language use, emotional skills, social development, and self-confidence. Still, many parents wonder if they can write off their child’s preschool expenses at tax time. The answer is “possibly.”
The Child and Dependent Care Credit
While preschool is not viewed as “school” by the IRS, the fact that the service classifies it as “childcare” does allow a deduction in certain circumstances.
With the Child and Dependent Care Credit, qualified parents and guardians can deduct preschool, nursery-school, and pre-K costs with IRS Form 2441. Let’s explore the requirements so you can see if you’re eligible.
The Qualifications
To qualify for the Child and Dependent Care Credit, you must have:
- Paid for the care of a child 13 years old or younger who you claim as a dependent and who has lived with you for at least six months
- Paid for the care of a spouse or dependent who is unable to care for themselves and who has lived with you for at least six months
You must also have used child care services to either work at a job or look for one. Also, the cost of the childcare must be less than your income within the previous taxable year. If you’re married, the childcare cost must be less than the yearly income of the spouse who makes the least.
Eligible Care
As for what kind of care qualifies for the credit, it can be any type of dependent care, whether at a dedicated daycare, a vacation camp, a church, or even care provided by a friend or family member. Yes, even fees paid to a Montessori preschool are eligible.
Credit vs. Deduction
It’s important to distinguish between a “deduction” and a “credit.” While the two terms are often used to describe the same concept, they are functionally different.
- Credit: Lowers a tax bill after the taxes have been calculated
- Deduction: Lowers the gross income amount to be taxed
So while the Child and Dependent Care Credit is not technically a deduction, it still saves eligible individuals a decent amount of money.
How Much Money Is the Credit Worth?
Typically, the credit provides coverage for 20% to 35% of the care expenses. What percentage you receive depends on your gross income. The upper limit that an individual can receive is $3,000 per child or $6,000 for two or more children. This credit will not provide any more than $6,000.
Choosing the Right Preschool
Choose the right preschool to ensure your child gets the care and support they need. The Montessori Charter Schools of Flagstaff work to inspire children so they develop a love of learning.
We offer toddler, preschool, kindergarten, elementary, and middle school programs that serve children from 18 months to 14 years old. Our goal is to provide your children with an environment that allows them to reach their greatest potential. Reach out to us today to learn more about what we offer.
