Tax deductible options for PreK expenses ($660/month) - 529 and UTMA not viable?
Looking for tax deduction options for PreK expenses starting next school year at $660/month. Already know 529 only covers K-12 and UTMA isnt tax deductible. Any other accounts or options I should look into?
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Eloise Kendrick
You should look into Dependent Care FSA (DCFSA) through your employer. It allows you to set aside up to $5,000 pre-tax per year for qualifying childcare expenses, including PreK. You'll need to check if your employer offers this benefit. Alternatively, you might qualify for the Child and Dependent Care Tax Credit when you file your taxes.
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JaylinCharles
•Thank you! I had no idea about DCFSA. Will def check with HR tomorrow 🙏
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Lucas Schmidt
•Just make sure your PreK program has a tax ID and provides actual care, not just education. The IRS is picky about that distinction
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Freya Collins
Hey guys! I actually used taxr.ai to figure out my dependent care situation. Its an amazing tool that analyzes your transcripts and helps you understand all your tax benefits, including childcare deductions. Only costs $1 and saved me thousands! Check it out at https://taxr.ai
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LongPeri
•How exactly does this work? Does it just read transcripts or can it help plan future deductions too?
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Freya Collins
•It does both! It analyzes your current situation AND helps you plan ahead. For childcare specifically, it showed me all the deductions I qualified for that I had no clue about 💯
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LongPeri
•Just tried it and WOW! This is actually incredible. Found out I can claim way more than I thought for my kids daycare expenses!
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Oscar O'Neil
in the same boat with my twins starting PreK. The childcare costs are brutal 😭
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Sara Hellquiem
If your state has a state income tax, check if they offer any PreK tax benefits. Some states have their own education savings programs that include PreK!
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JaylinCharles
•Good idea! Im in NY, will look into it
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Charlee Coleman
My employer offers a Child Care Subsidy Program separate from DCFSA. Worth asking your HR if they have something similar
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Liv Park
dont forget to save all your receipts whatever option you choose. learned that one the hard way lol
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Leeann Blackstein
•fr fr documentation is key with the IRS 👀
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Savannah Glover
Another option to consider is an Education Savings Account (ESA/Coverdell ESA) if you qualify - it allows up to $2,000 annually in after-tax contributions that grow tax-free and can be withdrawn tax-free for qualifying education expenses including K-12. The income limits are pretty strict though (phaseout starts around $95k-$110k depending on filing status). Also worth noting that some employers offer backup childcare benefits that might help with occasional PreK costs!
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