Education tax deductions.Does the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. allow parents to deduct their dependents' tuition and any related expenses if they attend parochial school parochial school (pərō`kēəl), school supported by a religious body. In the United States such schools are maintained by a number of religious groups, including Lutherans, Seventh-day Adventists, Orthodox Jews, Muslims, and ? --P. Briggs Millburn, NJ Unfortunately, the answer to your question has a few conditions. According to the IRS. "Tuition for primary or secondary school education is neither deductible as an education expense, nor as a charitable contribution charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. ." Furthermore, the IRS says you cannot take a charitable deduction for tuition, even if you pay for children to attend parochial schools or qualifying nonprofit daycare centers. But while you can't write off your child's parochial school education as a deduction, you can get some tax benefit by establishing a Coverdell Education Savings Account Coverdell Education Savings Account A special individual retirement account opened on behalf of a child under age 18. Contributions of up to $2,000 annually may be made by anyone who meets specified income limits. (formerly an Education IRA) for a dependent child under the age of 18. The Coverdell is a custodial account Custodial Account 1. An account created at a bank, brokerage firm or mutual fund company that is managed by an adult for a minor that is under the age of 18 to 21 (depending on state legislation). 2. A retirement account managed for eligible employees by a custodian. that pays qualified education expenses for a designated beneficiary. If you are a taxpayer whose modified adjusted gross income is less than $110,000 for 2003 ($220,000 if married/filing jointly), you can establish [his account for as many beneficiaries as you wish allowing you to contribute up to $2,000 per year that will grow tax-free. You can then use the tax-free distributions from Coverdell accounts to pay Qualified expenses. such as tuition or books, for public, private, and religious elementary and secondary school expenses. For complete details on the benefits of the Coverdell and other questions related to education benefits, see IRS Publication 970 Tax Benefits For Education (www.irs.gov/pub/irs-pdf/p970.pdf). --Matthew Scott Mail your money management questions to Ask B,E. BLACK ENTERPRISE, 130 Fifth Ave. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY 10011 or send an e-mall to scottm@blackenterprise.com |
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