Can I Deduct Private School Tuition?

May, 10 2022 by Steve Banner, EA, MBA

This is a question that parents of K-12 school-aged children often ask – especially towards the end of the academic year when schools tend to review their operating budgets and warn of pending fee increases. In most cases, we must inform disappointed parents that the answer to their question is “no”; however, there are some parts of the tax code that, in fact, can allow tuition fees to be fully deductible.

But before going any further, please be aware that we will only be talking about the tax laws that affect K-12 children at the federal level. There are some states that offer families a limited form of tax relief for K-12 private school expenses, but these programs are beyond the scope of this article.

 

OK, so when can these tuition fees be fully deductible at the federal level?

Tuition paid for a child with special needs may be deductible if the child is attending a particular school based on a doctor’s written recommendation. The education must be intended to help the child overcome learning disabilities caused by mental or physical impairments, including nervous system disorders. The education may take the form of tuition paid to a specially trained and qualified tutor, in which case, the cost of tuition can be deductible. Alternatively, the cost of tuition, meals, lodging, and transportation can be deductible if the child is attending an institution designed to provide the necessary special education and the medical care is a principal reason for their attendance. Thus, for children who qualify under this provision of the tax code, the potential tax deduction can, in some cases, can go well beyond just the costs of tuition and include their meal and lodging expenses. These amounts may be regarded as medical expenses and claimed on Form 1040, Individual Income Tax Return on Schedule A, Itemized Deductions under the heading of “Unreimbursed Medical Expenses”.

For the purposes of this deduction, an “institution,” as mentioned above, can also include a regular independent school that offers a special curriculum for neurologically disabled individuals. And a private tutor can include a specialized teacher who provides specialized education to dyslexic children, as long as the education was recommended by a doctor.

As we can imagine, the total amount of expenses related to the education of a special needs child can add up quite quickly. But according to the tax code, medical expenses can only be claimed as an itemized deduction on Schedule A, Itemized Deductions.

At this point, it would be a good idea to briefly review the general rules that apply to claiming itemized deductions. Generally, on their individual income tax return, taxpayers have a choice of claiming either the standard deduction or their allowable itemized deductions.

The amount of a taxpayer’s standard deduction is based on their filing status. For 2021, the standard deduction rates for the most common filing statuses are:

• Married Filing Jointly or Qualifying Widow(er): $25,100
• Head of Household: $18,800
• Single or Married Filing Separate: $12,550

Currently, taxpayers who itemize may claim up to $10,000 of state and local income, real estate, and property taxes they paid for the year, mortgage interest paid on their primary residence and one other property (up to specific limitations), charitable contributions made, and all medical expenses paid that were greater than 7.5% of their adjusted gross income (AGI).

Taxpayers may take the standard deduction for their filing status even if they did not actually spend this much on the expenses normally allowed when itemizing. But if the total of their expenses was greater than the “standard” amount, taxpayers can fill out Schedule A to claim the actual amount they spent, item by item.

When adding up their expenses to see if they qualify to itemize, taxpayers should also be aware that their travel expenses related to special needs education may be deductible as medical expenses. For 2021, the medical mileage rate is 16 cents per mile. If an overnight stay is required, taxpayers can claim up to $50 per day for lodging.

To summarize our discussion, although private school tuition is not deductible for most taxpayers, we have seen that the tax code offers potential deductions for the parents and guardians of children with special needs.

The best advice we can offer for taxpayers in this position is to keep detailed records of all their expenses related to the special education of their dependents throughout the year to see if they qualify to itemize. You may be surprised how quickly these amounts add up, and I’m sure you’ll agree that any deduction you can qualify for is a good deduction!