What’s that eerie silence all around us? It’s back-to-school season! As summer comes to a close, many parents are focused on preparing their children for the upcoming school year. Here at ClarkSilva, we’re always tax-minded so this got us thinking: how can parents also integrate planning for their taxes during this time? We’ve compiled a list of some relevant school-related tax breaks for parents, students and teachers – take a look!

Firstly, if you are an educator, you should know about the Educator Expense Deductions. This is solely for teachers and school staff in grades K-12 and helps you to deduct certain unreimbursed expenses for things teachers usually pay for out-of-pocket. This includes:

  • Books and classroom materials
  • Cleaning Supplies
  • Personal protective equipment
  • Educational software and subscriptions
  • Professional development courses

You’ll need to keep your receipts but you can take advantage of this credit even if you don’t itemize your deductions. It can be up to $300 per educator, or $600 if you and your spouse are both educators.

If you’re a parent, you’ve got a few options based on your circumstances. If you are paying for childcare while you attend school yourself (or work!) and your child is under 13, you might qualify for the Child and Dependent Care Credit. This credit is subject to income limitations and is not refundable but can be up to $3,000 in tax savings for one child. Some of the eligible expenses are:

  • Preschool and daycare
  • Before and after school programs
  • Summer day camps (not overnight)
  • Babysitters and nannies (if paid legally)

Beyond that are the standard education credits available to those attending higher education. That includes the American Opportunity Tax Credit which is available to parents or students in their first four years of college. This credit can cover expenses like tuition and fees, books and course materials and supplies or equipment related to your studies. This credit can be up to $2,500 per student and is partially refundable. It is income-limited though and begins to phase out at $80,000 for single filers and $160,000 for married couples filing jointly.

Another tax credit available is Lifetime Learning Credit, which unlike the AOTC previously mentioned, is not limited solely to the first four years of college. You can be a student of any age pursuing grad school or even professional development courses related to your career. It covers standard expenses like tuition, fees, books and some online programs. This credit is not refundable however and has lower income limits than the AOTC.

Finally, don’t forget to keep 529 Savings Plans top of mind. We’ve discussed their benefits for college savings already here but it’s important to note that K-12 tuition for public, private and religious schools is now included as a qualified tax-free withdrawal as well. The other expenses that qualify include:

  • Tuition, books and fees for college education (as well as other qualified expenses)
  • Student loan repayments (up to $10,000 lifetime per beneficiary)
  • Registered apprenticeship programs

Those contributing can also receive deductions or credits for your contributions depending on the state you reside in.

The rhythms of life, from school season to business quarters, can serve as important reminders to stay on top of your tax planning and be proactive in seeking tax savings. With the right planning, you can stay focused on your other goals while your money works for you. At ClarkSilva, we can help you determine which tax credits make sense for your unique financial situation and provide you all the peace of mind that proficient tax planning offers. Reach out to us today!