Education Credits or Deductions

[photoman]

I believe that i am correct on this. I have a client that has their two children in Catholic Grade School. They pay private tution. She was told she can get a credit or deduction for this. I have told her that there is no such credit. Please help me on this one. I cannot find anything that would support her thoughts.

[Jiggers]

No tax credit

You are correct. No tax credit for education.

[Larmil]

Maybe they are talking about a state credit or deduction.

[erchess]

Before and/or After School

If billed separately from tuition for the school day before and or after school care would be a basis for the dependent care credit if other requirements are met.

[photoman]

Thanks for the advice

I appreciate the reassurence

[rgtaxservice]

jump through hoops

She was told she can get a credit or deduction for this.
I cannot find anything that would support her thoughts.

The sad part is that someone with no tax experience told your client an incorrect tax tid-bit and said client will now accept this tid-bit as gospel. Now as a professional, the client will only accept the truth from you if you 'prove it' and present it in writing - the IRC.

In cases like these I tell the client their tid-bit wrong and then explain why!

"My brother said...."
"Well, your brother is wrong. This is the correct and legal way to report..."

"Oh, your hairdresser told you....I hope your hairdresser cuts hair better than he/she doles out wrong tax advise. Here's the right way to....".

Be firm but gentle. You are the professional...not the the client....and most definately not the 'someone-told-me person!

[WhiteOleander]

Actually, I think this is one of those "urban legends" that floats around. A lady came into our office this week wanting to deduct the same thing. Tuition paid to a catholic school for her child. We told her that it was not legal. She kept insisting. She finally left the office, determined to find a preparer who knew the real rules.

[BP.]

With a new & popular Catholic Regional Elementary School just a mile down the road, I get this question often. Though few (if any?) parents had the foresight to plan this, I let them know the only tax benefit for their tuition would have been through using an ESA. TTB 12-5 & 6.

[DaveO]

They need to return to their barber and ask for the code section or other authority being cited. Honestly, modern barber schools just don't delve into tax theroy like they used to.

[Jesse]

Sometimes I think people get the rules a little mixed up and hear what they want to hear.

When the rule first changed a few years ago to allow the funds from an Education IRA to be used for private and religious elementary and secondary schools is when I found the firestorm of "misguided knowledge" to say the tuition could also be used for the education credits.

[rjholmes]

I had the same situation last night. They had heard "education credit" and assumed that it was for fees to ANY school. They were long-time clients and didn't question it when I told them they could not take it. Lucky me.

[JON]

If in Minnesota

you may qualify for a deduction (limited by grade) or credit depending on the income levels. this may apply to some other states also.

[TaxmannEA]

In Illinois

there is a state tax credit for private school tuition. Since you are in Indiana, your client's friend may have slid over the border.

[Fuzzy Faced Leader]

Since there is tax credit for education, the advise given by others is not entirely untrue. The problem is the limitations and restrictions attached to the credit. Rather than tell clients they got bad advise, they should be told that there is such a credit, but it doesn't fit their specific situation, and then explain why.

[Bees Knees]

(as mentioned above by BP)

Actually, there is a federal education benefit for students K-12 enrolled in private school. It is the Education Savings Account (ESA) provision that allows taxpayers to make non-deductible contributions to the savings account, and then withdraw the contributions plus earnings tax free to pay for tuition, fees, books, supplies, and equipment (including computer technology or internet access). See TTB page 12-5.

Sometimes, when people hear about a tax benefit for enrolling their kid in private school, they just assume it is a deduction or a credit. Not all tax benefits are in the form of a deduction or credit. ESA benefits are in the form of being able to earn tax-free interest on savings that will be used for education, including K-12.

Instead of assuming what they heard was wrong, assume they must have miss-interpreted what they heard. Explain, yes there is a benefit, its just not a deduction or credit.