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Private school not post secondary...


taxguy057

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I got a client who's 15 year old daughter is going to private school along with a private tutor. He pays 750.00/mo for school and 240.00/mo for the tutor. Is there any tax benefits for this expense. I know from what I have read only post secondary qualifies for education credits.I was wondering if anything in the new educational credits passed included a situation like this...

Thanks for any help on this..

TG

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>>any tax benefits for this expense<<

Yes. Tax-free earnings from an educational savings account can be used to pay any of this expense. It is possible that some of the cost or related costs that exceed the value of the schooling could be treated as charitable contributions. In some cases the fees might include medical costs. The expenses are included in support for determining dependency, and the school records can be evidence of where the child's principal home is. If the tutor qualifies as an independent contractor the family could avoid employment taxes completely.

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COVERDELL EDUCATION SAVINGS ACCOUNT (ESA)

This savings account is used to pay qualified educational expenses at an eligible educational institution. For purposes of the Coverdell ESAs, an eligible educational institution includes a public, private, or religious school (kindergarten through grade 12) as determined under state law, as well as a college, university, vocational school, or other institution eligible to participate in a student aid program administered by the Department of Education. Contributions are not deductible; however, qualified distributions are tax-free. Contributions can be made by eligible individuals in the childs name, but the total can not exceed the stated maximum for any one year.

See IRS Publication 970

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