Sunday, March 22, 2020

Are Montessori Preschool Expenses Tax Deductible?

Montessori preschool - Are Montessori Preschool Expenses Tax Deductible?

Montessori preschool expenses are eligible for a credit in California, and the Internal Revenue Service has provisions for credits on your federal returns under the Child and Dependent Care Credit. Combined, these two credits may save you up to $12,000 in preschool related costs as well as before and after school care as well.

Federal Tax Credits

The IRS has a tax credit known as the Child and Dependent Care Credit which can be used to offset some of your Montessori preschool expenses. You may claim up to $3000 for a single dependent or up to $6000 for 2 or more dependents. This federal income tax credit may exceed your actual taxes paid under certain circumstances. This credit also applies to summer day camps without overnight residency. Here is Form 2441 to complete and print.

Claiming the Credit in California

If you needed preschool care for your child in order to work or search for a job, your expenses may be a credit on your California return. The Child and Dependent Care Expenses Credit will allow up to $3000 for a single child’s expenses. Up to $6000 if you have 2 or more children preschool or daycare.

  • Qualifying is simple and includes: 
  • Child’s age and citizenship 
  • The child was your dependent for at least 6 months 
  • Child’s residence and school must be located in California 
  • Earned Income During 2019 

The instructions for claiming the credit are easy to follow and give you line by line instructions for filling out Form 3506. Submit this form along with your taxes return, or have your tax representative file them for you. California FTB makes it even easier by providing an editable PDF form that you can fill out then print for your records.

Do Not Use 529 Plans

The 529 College Savings Plan was designed to help parents save money for their children to go to college. It was later expanded to include K-12 education expenses to offset growing education costs. Unfortunately, preschool is not classified as primary education, so using 529 plans to offset preschool expenses could result in tax penalties. Please keep in mind that we are not tax experts. The information provided here is intended to help you reduce the burden of child care, but it is important to make sure you qualify before filing the claim for your Montessori preschool expenses.