Are Preschool Expenses Tax Deductible?

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The benefits of having a child reach into every aspect of life -- including taxes. One such tax benefit for having children is the Child and Dependent Care Credit, which is traditionally associated with paying for daycare. However, parents who choose to send their child to preschool instead of daycare may be able to take the credit as well, if all of the conditions are met.

Qualifying Person

  • In order to claim the Child and Dependent Care Credit for preschool tuition, the child who is attending preschool must be a qualifying child. A qualifying child for this tax credit normally must be under the age of 13, but when the expenses are for preschool and not daycare, only children who are not yet in kindergarten qualify. In addition, you must be claiming the child as a dependent on your taxes. If you pay for a nondependent's preschool tuition, you may not take the tax credit.

Conditions

  • You may only take the dependent care credit for preschool expenses if you are working or looking for work while the child is at school. If you are a stay-at-home parent, you cannot take this credit. You must also have earned income during the year to take the credit. If married filing jointly, both people must have earned income during year to take the credit. The exception to that is if one spouse is a full-time student or is disabled and unable to care for the child.

Income Guidelines

  • If the other qualifications are met, the deduction for preschool expenses can be taken regardless of income. For one person, you can claim qualifying expenses up to $3,000 and for more than one qualifying child you can take expenses of up to $6,000. These qualifying expenses will be multiplied by a decimal amount depending on your income. As of 2010, if you earn less than $15,000, you can take 35 percent of your qualifying expenses for preschool. The percentage decreases as income increases. At $43,000 or higher, a person can take 20 percent of the qualifying expenses.

Claiming the Deduction

  • Claiming the child care deduction for preschool expenses is a simple process. There is one extra form involved, Form 2441 Child and Dependent Care Expenses. You will need to list the name of the preschool and it's EIN as well as the name of the child and the total expenses paid for preschool during the tax year. Then follow the directions to calculate the amount of the tax credit. The amount is then reported on either the 1040 or 1040A. You cannot take this deduction with a 1040EZ.

References

  • Photo Credit playing image by Renata Osinska from Fotolia.com
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