Can You Deduct Your Children’s Private School Tuition to Pass the Means Test for Chapter 7?

On the means test, only a small portion of your children’s tuition can be deducted from your income.  Congress currently allows $156.25 per child as a deduction on the means test.  Specifically, Bankruptcy Code § 707(b)(2)(A)(ii)(IV) states:

“[T]he debtor’s monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,875 per year per child, to attend a private or public elementary or secondary school if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary, and why such expenses are not already accounted for in the National Standards, Local Standards, or Other Necessary Expenses…”

In Montgomery, Alabama, private tuition for one child can easily exceed $700 per month, excluding extra-curricular activities.  The $156.25 allowable deduction barely accounts for the average tuition paid by the majority of families.

Last Wednesday, the Alabama Department of Education released a list of “failing” schools to allow parents to receive a state tax credit to account for the cost of transferring their children to a non-failing public or private school.  Out of the 76 schools on the list, 18 schools located in the Middle District of Alabama Northern District were deemed as failing and 12 of those were in Montgomery County.  The schools in the Middle District of Alabama Northern District include:

Montgomery County:  Bellingrath Middle, Brewbaker Middle, Capitol Heights Middle, Chisolm Elementary, Dannelly Elementary, Davis Elementary, Fews Secondary Acceleration Academy, Goodwyn Middle School, Jeff Davis High, Johnson Elementary, King Elementary and Southlawn Middle

Macon County: Notasulga High

Chambers County: LaFayette High

Bullock County: South Highlands Middle and Bullock County High

Barbour County: Barber County High

Autauga County: Autaugaville

As a bankruptcy attorney practicing in Montgomery, it is heartbreaking to see parents struggling and sacrificing everything to send their children to private school or renting homes in high rent locations to be in the best public school district to ensure their children receive a good education.  Yet, the means test only allows a $156.25 per child.

For Alabama taxpayers whose children are attending one of these failing schools, the Alabama Accountability Act of 2013 allows a state tax credit to a “parent of a public school student” “to provide financial assistance… to a parent who transfers a student from a failing public school to a nonfailing public school or nonpublic school”.  If your child attends one of these failing schools, you have until May 1st to turn in a transfer form to have your child transferred to a nonfailing school.

If you are struggling to make ends meet, please contact your local Bond and Botes office to arrange a free consultation with one of our experienced attorneys.