As students and teachers head back to school and schedules settle into a routine, it’s also a great time to think about how education-related expenses may affect your tax situation. Whether your children are in daycare, K–12, or college, there are real tax benefits worth planning for, and acting on now can help you maximize your refund or reduce what you owe come tax season.
Here are several smart tax tips for this school year:
1. Claim the Child and Dependent Care Credit
If you pay for childcare so you (and your spouse, if married) can work or look for work, you may be eligible for this credit — even if the care is provided before/after school or by a summer camp.
- Covers expenses for children under age 13 or dependents who are physically/mentally incapable of self-care.
- Maximum credit is up to 35% of $3,000 in care expenses for one child (or $6,000 for two or more).
- Care provider info (name, address, EIN/SSN) must be included on your return.
- Tip: Keep receipts and documentation now — not just in April!
2. Take Advantage of the American Opportunity Credit (AOTC)
Have a child in college? The AOTC offers up to $2,500 per eligible student for the first four years of post-secondary education.
- Covers tuition, books, and course-related supplies.
- Student must be enrolled at least half-time in a degree or credential program.
- Income limits apply (phase-out starts at $80,000 for single / $160,000 for married filing jointly).
- Tip: You must receive Form 1098-T from the college to claim this credit — watch for it in January.
3. Keep Track of Qualified Education Expenses (Even if Paid with Loans)
You can claim education credits even if you’re using student loans or 529 plans — as long as the expenses themselves are eligible and paid in the tax year.
- Save records of tuition payments, books, laptops, software, and required materials.
- If using a 529 Plan, be careful not to “double dip” by using the same expenses for both a credit and tax-free withdrawal.
- Tip: Track costs by student and by funding source — 529, out of pocket, loans, etc.
4. Contribute to (or Start) a 529 College Savings Plan
Many states offer state tax deductions or credits for contributions to 529 plans, even if the child is already in college.
- Contributions grow tax-deferred and are tax-free when used for qualified education expenses.
- Can be used for K–12 tuition (up to $10,000/year) in some states.
- New IRS rules now allow up to $35,000 of unused 529 funds to be rolled into a Roth IRA (with restrictions).
- Tip: Consider contributing before year-end if your state offers tax benefits.
5. Know About the Dependent Exemption and Child Tax Credit
Most families still qualify for the Child Tax Credit, which is up to $2,000 per child under age 17 at the end of the year.
- A portion may be refundable depending on income.
- You must have a Social Security number for the child to claim it.
- Tip: If your child turned 17 this year, you may no longer qualify for the full credit — consider this when estimating your tax refund.
6. Educator Expense Deduction (for Teachers & School Staff)
If you or your spouse is a teacher, classroom aide, or school staff working K–12, you may deduct up to $300 ($600 if married and both spouses are educators) for out-of-pocket classroom expenses.
- Includes books, supplies, COVID-related PPE, software, and professional development.
- Must work at least 900 hours per year at a qualified school.
- Tip: Save those back-to-school receipts — even for purchases made in July and August.
Bonus Tip: Update Your Tax Profile if Your Family Changed
Back to school is a great reminder to update your household information:
- Did you welcome a new child this year?
- Has your child moved away for school (possible residency implications)?
- Have you started paying for childcare or college for the first time?
Any of these can affect your:
- Withholding (adjust your W-4 if needed)
- Estimated tax payments
- Tax credit eligibility
Final Thoughts
The cost of education adds up, but the IRS offers a variety of credits, deductions, and savings tools to help families lighten the load. By planning now, you can make sure you claim everything you’re eligible for and avoid missed opportunities in April.
Want help identifying which education tax breaks apply to your family? Reach out to schedule a mid-year check-in, we’re here to help you make the most of the school year.