In order to qualify, families must pay for these childcare services separately from their other school expenses including tuition, books and other required materials. Similar to Coverdell ESA plans, families can also use funds saved from plans toward K — 12 tuition fees.
With this particular plan, savings withdrawn must be used for tuition expenses only in order to remain tax-free, whereas ESAs can be used for books and other school supplies required for the program.
Many private schools offer tuition assistance for families that demonstrate financial need. Other Tax-Deduction Alternatives Another potential option for deducting some of your taxes is to take advantage of the Child and Dependent Care Credit.
Tuition Assistance Many private schools offer tuition assistance for families that demonstrate financial need. Instead, Congress has specified that a payment to an organization operated exclusively for religious or other eleemosynary purposes is deductible only if such a payment is a "contribution or gift. The House and Senate Reports on section , and the other legislative history of that provision, offer no indication that Congress' failure to enact such a preference was an oversight.
Second, petitioners' deductibility proposal would expand the charitable contribution deduction far beyond what Congress has provided. Numerous forms of payments to eligible donees plausibly could be categorized as providing a religious benefit or as securing access to a religious service. For example, some taxpayers might regard their tuition payments to parochial schools as generating a religious benefit or as securing access to a religious service; such payments, however, have long been held not to be charitable contributions under section In the instant case, petitioners clearly derive a substantial benefit on account of the payment of tuition and accordingly, such payments are not deductible.
Prior to Hernandez, federal tax decisions had uniformly disallowed payments to religious schools insofar as they represented the cost of tuition. In DeJong v. Commissioner, F. The Society charged no tuition but raised funds from parents of enrolled students, churches and other entities. Although no tuition was charged, the parents who could so afford were expected to contribute to the Society at least to the extent of the cost of providing their children with an education.
In Oppewal v. Again, the courts disallowed that part of the payment which represented the cost of educating the taxpayers' children in the religiously-oriented school although by use of a different test. The Tax Court employed a subjective test, i.
The First Circuit preferred an objective test, i. Both courts concluded however, that the school's cost of providing a service which included religious instruction to taxpayers' children was not deductible as a charitable contribution. In Winters v.
The Second Circuit agreed with the opinions of the First and Ninth Circuits and concluded that to the extent that the taxpayers received a benefit in return, the payment constituted nondeductible tuition. Petitioners argue that the schools in the instant case are different from those in the reported cases and revenue rulings in that most of the time is spent on religious training rather than a secular education.
This difference, it is asserted, requires an opposite conclusion. The Hernandez Court disagreed with this proposition when it stated that section of the Code "makes no special preference for payments made in the expectation of gaining religious benefits or access to a religious service.
The Scientology "training" at issue in Hernandez involved the intensive study of the writings and tenets of Scientology. This training did not involve secular education, and was a means of progressing up the Scientology "Bridge. The taxpayers stress the amount of time spent in study by students at Orthodox Jewish schools. Even if it is true that they devote more time to the activity than students of Scientology, this is simply a question of degree, and we see no reason why this distinction supports a result different from the result in Hernandez.
Thus, whether the payment involved is in consideration for training to become a good Scientologist, Christian or Jew, we conclude that, under Hernandez, such payments do not qualify as charitable contributions within the meaning of section The petitioners also attempt to distinguish the parochial school cases such as Winters on the ground that the activities in the schools attended by their children primarily constitute religious worship or observance, rather than education as such.
Your memorandum also finds this distinction potentially relevant, and devotes a portion of its discussion to an examination of Orthodox Jewish belief, the relationship of prayers to study, etc.
Here again, we find Hernandez dispositive. Scientology "auditing," also at issue in Hernandez, was stipulated to have no significant educational component, and was clearly a "religious observance.
The petitioners make the point that, for the Orthodox Jew, the obligation to study the Torah and the Talmud is a matter of duty and adherence to Jewish law, a lifelong commitment ranking aside the obligation to pray. Related to this is the argument that the benefits derived from the observance of such duties primarily benefit the community, not the individual.
We do not find the distinctions argued by the petitioners to be relevant under Hernandez, and respectfully disagree that resolution of the issue necessarily involves a searching inquiry into the tenets and beliefs of Judaism. In fact, one of the primary reasons underlying the Hernandez Court's neutral interpretation of section -- along with the Court's adoption of a "structural" analysis, with its emphasis on "external features" -- was precisely in order to avoid the practical and constitutional difficulties inherent in drawing such distinctions and making such inquiries.
In our view it would be difficult, if not impossible, to resolve cases like this on the basis of such factors as the religious or secular nature of the benefit; the relative importance of a religious practice to the adherents of a particular religion; how much of an obligation the member feels to participate; whether a spiritual benefit accrues primarily to the individual participant or donor, rather than the larger community; etc.
Fortunately, under Hernandez' structural analysis such determinations and inquiries are largely unnecessary. Clearly, they did: an examination of the "external features" indicates that their tuition payments entitled their children to attend a facility where, in the company of others and under the supervision of a trained rabbi or instructor they could engage in regular religious study and prayer. The inquiry ends there; the doctrinal content and significance of the activity is not germane.
In Gotlieb, the taxpayer made payments to a synagogue school in consideration of religious training provided to his children and claimed these payments as charitable contribution deductions. The tax commissioner, relying on Oppewal, supra, disallowed the deductions. The Minnesota court, however, could find no federal tax decisions which involved payments for purely religious services and concluded that the taxpayer was entitled to the claimed deductions.
The decision of a state taxing authority on a federal income tax question is not controlling for federal income tax purposes. See Texas Learning Technology Group v.
Commissioner, 96 T. Furthermore, the Supreme Court's opinion in Hernandez, which post-dates the Gotlieb opinion, is dispositive in its holding that where a taxpayer receives a benefit in return for the alleged contribution, a deduction is not allowable regardless of the nature of the benefit.
Petitioners' reliance on Davis in support of their deduction is also misplaced. In Davis, the Court addressed the deductibility of payments made directly by parents to their missionary children at the request of a church. The primary issue was whether these direct payments were "for the use of" the church as defined in section c. The Court held that a gift or contribution is for the use of a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement.
Petitioners assert that because the qualified donees in the instant case have unfettered control over the tuition payments, a deduction is allowable under the Davis test. In fact, the donees in the instant case do not have unfettered control; in exchange for the tuition payments, the donee schools must provide an education to the petitioners' children.
Moreover, the issue in this case is not whether the payments were made "to or for the use of" a qualified donee; rather, the issue is whether petitioners received a substantial benefit in return, i. Petitioners' assertion that the tuition payments are similar to amounts paid for pew rents, building fund assessments, periodic dues, tithing, High Holy Day tickets and Mass bequests, lacks merit. Question about Sunday religious school tuition deduction Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Question about Sunday religious school tuition deduction Post by am » Thu Dec 28, pm We are trying to save a bit on taxes by prepaying temple dues. Our kids attend Sunday religious school at our temple.
We pay for this on top of annual dues for the temple. My understanding is that the Temple dues are tax deductible, but I am not sure about religious school tuition? Also, would tutoring for my child payed to the temple be tax deductible?
Re: Question about Sunday religious school tuition deduction Post by sport » Thu Dec 28, pm Generally, if a charitable organization gives you goods or services in return for a payment, the payment is not deductible. So, I would think neither the tuition nor tutoring fees would qualify as deductible.
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