Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

September 26, 2012
Are there any tax benefits for elementary school tuition?

Q: We recently started our son in private elementary school in the fifth grade. Do you know of any federal/state tax income tax benefit on the monthly tuition we are paying? Any way we can route the payments to get federal/state income tax benefits? I heard the term "School Voucher" but could not find much detail on it. Appreciate your thoughts or guidance on the subject. Thanks, Shevtank, San Diego, CA

A: Most of the education-related tax benefits are targeted to college tuition and expenses. There is no deduction for elementary school tuition. There are no tax credits for elementary school tuition payments. There are, however, two potential tax benefits available for the payment of elementary school tuition.

There is a possible exclusion from income for earnings from a Coverdell Education Savings Account (CESA) to the extent that they are used to pay qualifying education expenses. Qualifying education expenses include elementary school tuition through 2012 under current law. Up to $2,000 can be contributed to a CESA per year. The contribution amount is subject to a phase-out if your modified adjusted gross income exceeds $95,000, becoming $0 at $110,000 ($190,000 and $220,000 if you are married filing a joint return). To the extent that distributions include earnings on funds contributed to the account, and the distributions are used to pay qualifying education expenses, the earnings are excludable from taxable income. This provision is currently scheduled to sunset December 31, 2012 unless Congress acts to extend it.

The other potential tax benefit applies under very limited conditions for students that have a mental or physical handicap and attend a special school to treat that handicap. If the principal reason for attending the school is to alleviater the mental or physical handicap, the cost of the tuition may be deductible as a medical expense. Medical expenses are subject to a 7.5% of adjusted gross income floor (10% starting in 2013). You will need proper documentation of the physical or mental handicap as well as proof of the payment of the tuition. Again, this deduction is available only under very limited circumstances.

I am not aware of any "school voucher" programs for federal tax purposes. I have seen people try to deduct tuition paid to private schools as charitable contributions. This approach has been successfully challenged by the IRS and I do not recommend it.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.

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