But there's some good news, which is that parents who paid tuition in 2019 for preschool or daycare in order to work may qualify for a credit that can help you save money on taxes this year. Here's what all parents should know before filing their returns on July 15, 2020, the updated tax deadline.
Is preschool tuition tax-deductible?
The sum of your child's entire preschool tuition is not tax deductible, but you may be able to get something better than a deduction: a credit called the Child and Dependent Care Credit, worth up to $1,050 for one child and up to $2,100 for two or more kids.
How do I know if I'm eligible for the Child Dependent Care Tax Credit?
There are a few criteria to be eligible for the Child and Dependent Care Credit:
- If you have someone take care of your child so you can work or look for work
- Your child is under the age of 13 at the end of the tax year (no age limit if they are disabled)
- You must be able to claim your child as a dependent
- Your filing status must be single, head of household, qualifying widow or widower with a qualifying child, or married filing jointly.
Does preschool tuition count as dependent care?
Yes, it does count if you are paying someone to take care of your child so you can work or look for work. Day camps, such as summer camps and sports camps, count as well, but overnight camps don't.
How much could I potentially get back on taxes for preschool tuition?
If you are able to claim the Child and Dependent Care Credit, you may be able to claim up to $1,050 for one child and up to $2,100 for two or more children.
The great thing about credits is they are a dollar for dollar reduction of your taxes. So if you owe taxes of $1,050 and have one child, you may qualify for a credit of up to $1,050 and wipe out the taxes you owe.
The credit is based on a sliding scale: Depending on your income, your credit is 20%-35% of your childcare expenses up to $3,000 (or $1,050), and 20%-35% of childcare expenses up to $6,000 (or $2,100) for two or more kids.The bottom line: While this tax credit is unlikely to completely cover your child's preschool tuition for tax year 2019, don't miss out on this tax credit if you've paid for preschool or daycare for your child so that you can work. And remember to check your eligibility for other tax credits and deductions for families, including the Child Tax Credit and the Earned Income Credit.
This post was first published February 2020; it has been updated.