However, there are some newer tax credits in recent years that were designed to help struggling private school families, as well as other possible deductions you might have overlooked. For instance, Illinois is one of a small number of states that do provide families with possible tax credit to offset tuition at places like Saint Anne Parish School.
At Saint Anne, we offer an impressive array of benefits and special programs for all families whose children attend the school, including rigorous academic programs, fun sports teams, and a diversity of student clubs. But every bit helps, right? Here are some ways private school families are reducing their tax liability this year.
Education Expense Credit
Educational expenses can add up. Fortunately, the state of Illinois allows parents or guardians a tax credit of 25 percent of certain education expenses. If your child goes here, you should be able to write off a small amount of money spent on school tuition, books, lab fees, or other qualifying expenses of over $250. This goes for each child who lives in Illinois and is enrolled in either a private or public school. The maximum annual credit is $500 per family.
Before- and After-School Care Deduction
Expenses outside of school can also add up, making it harder to afford a private school. Ask any parent who has to pay a daycare center, babysitter, or other child care provider. Be sure to find out if you’re eligible for assistance through the Child and Dependent Care Tax Credit.
A few things to know about it:
- This credit provides tax relief for money spent on before-school and after-school care expenses while the parents worked or looked for work.
- The total expenses you may use to calculate the credit is $3,000 for one child or $6,000 for two or more children, for a tax credit of up to 35 percent of qualifying expenses.
- Parents of children under 13 are eligible.
- You may also qualify if your spouse has a disability.
The payments must be separate from your tuition payments. The deduction is designed to assist working parents and guardians with the general expenses involved in raising a child.
Empower Illinois Tax Credit Scholarship
You might be able to get extra help funding your child’s Catholic education through tax credit scholarships that were created through the “Invest in Kids Act.” The act was part of a statewide school choice program. Many families in Catholic schools are already benefitting from this scholarship program, which was launched several years ago.
Priority is given to students from lower-income families. However, after April 1, 2021, the qualifications expand to include a broader group of families, subject to the availability of funds. In its first year, a family of four could reportedly make up to $73,800 and get one or more scholarships or make up to $98,400 after being selected.
These scholarships are intended specifically for private schools. They’re funded by donors who receive a tax credit on their state income tax as a result of their donation.
Saint Anne began accepting scholarship applications in January for the 2021-22 school year.
It’s a lengthy process, as families have to apply through a scholarship granting organization (SGO) such as Empower Illinois or Big Shoulders Fund, which distributes the scholarships. The Archdiocese of Chicago is another good resource for parents seeking information on how to apply and other details.
Though technically a saving plan for college, 529 plans can also offer K-12 incentives. Up to $10,000 per year of funds in a 529 plan can be used for private or Catholic school tuition. The plans allow you to deduct up to $10,000 ($20,000 if married filing jointly) of annual contributions from your taxable income. The earnings grow tax free, and they won’t be taxed when taken out to pay for college.
There may be other education-related ways to minimize the taxes you’ll owe this month. Be sure to review the details with your accountant, as every family is different and tax laws are subject to change.