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Tax Lessons On Donations To Private Schools

Fort Lauderdale, Florida, December 29, 2005

If you contribute money to a religious school or college, the amount can be tax deductible. But be careful if your child or grandchild attends the school. Here's why.  

You can deduct charitable donations made to qualified religious schools or colleges, but not all donations automatically qualify. Be careful if you are contributing money to a school that your child or grandchild attends.

Case in point: A married California couple paid to have their three children attend two private,

religious schools that combined traditional schooling with a religious education. Based on an allocation of the school day’s activities, they deducted 55 percent of the cost of the tuition as a charitable donation. The day consisted of 55 percent religious education and 45 percent secular education.

The IRS and the Tax Court denied the charitable deduction. "A tuition payment to a parochial school is generally not considered a charitable contribution because the taxpayer making the payment receives something of economic value . . . educational benefits, in return," according to the Tax Court. 

The Appeals Court agreed and noted that the couple failed to show that the nearly $24,000  in tuition payments they made exceeded the market value of a secular education (Sklar, CA-9, 1/29/02).

 Lesson to be learned: Keep your payments for education and charity separate and apart. Make sure you receive a detailed breakdown of payments from any school you give money to, especially if your child or grandchild attends classes there.




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