Summary
- Private schools need to be aware of IRS Forms 1023 and 990 to establish and maintain nonprofit status.
- While very few families can use private K-12 tuition for a tax deduction, options exist to use pre-tax or investment contributions toward education expenses.
- In addition to recent federal tuition voucher rollout, many states use state funds for family private school tuition and expenses.
Most professionals who get involved with private education do so out of a dedication to helping future generations, not a passion for tax paperwork.
Yet, it’s important to stay aware of relevant rules as they apply to private school tax forms, as they impact the ability of families to afford tuition and the non-profit status of independent schools.
This blog will go over a few compliance considerations, tuition-assistance resources for families, and an update on voucher availability.
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What Tax Forms Does My Private School Have to Consider?
K-12 private and independent schools must adhere to federal tax laws to preserve their tax-exempt status. This annual obligation involves completing various forms, but of particular importance are IRS Forms 1023 and 990.
Used to determine whether your institution qualifies for 501(c)(3) eligibility, Form 1023 establishes if your school receives a federal income tax exemption. Provide general information around your school’s organizational structure, purpose, regular activities, financial data, etc. Education must be the primary function of your school to qualify for 501(c)(3) designation.
A determination letter from the Internal Revenue Service (IRS) will officially certify a school as a nonprofit, allow it to collect charitable donations, and determine annual contribution amounts. Schools filing within 27 months of formation can retroactively receive nonprofit status for the months before application approval.
Form 1023 may classify a school as a nonprofit, but even tax-exempt organizations must continue to annually file with the IRS. With Form 990, the IRS collects financial information from these tax-exempt organizations to ensure ongoing compliance and encourage them to publicly share the health of their programs. There are many states that also use Form 990 to ensure operational and tax compliance for nonprofits operating within their borders. This form relies on calculating gross receipts over the past year, which for private schools combines the total tuition, grants, and donations received.
Family-Side Tax Forms
Unfortunately, most families cannot write off their kids’ private school tuition when filing taxes, but there are additional options you can share with school families to help with expenses. There are few school-related tax forms for parents to worry about, but the following are options to better finance private school expenses.
When Are Families Eligible for Tax Deductions?
Just like with public K-12, having children attend private school does not create tax-break opportunities. At the federal level, tuition is not classified as an item that can be expensed from taxes owed.
The only current exception: a child attending private school for students with special needs may qualify for tuition or tax deduction, provided a physician has certified the child requires this specialized education.
Coverdell Education Savings Account (ESA)
Similar to using a Health Savings Account for medical expenses, an ESA is an option for families to cover education-related expenses. Acting as a trust, ESA accounts are not tax deductible but do allow families to use investment earnings for qualified expenses, such as the following.
- Tuition
- Textbooks
- Room & board
There are contribution limits across all accounts made in a child’s name ($2,000 per year). Account owners will annually receive Form 1099-Q in time for tax season.
Qualified Tuition Plan (QTP)
Also known as a 529 Plan, a QTP is a state-administered investment account aimed to assist contributors with qualified tuition payments. Earnings from these accounts are tax free while still in the account, and any distributions don’t need to be reported as income, so long as they are only spent on educational tuition.
QTPs also report all relevant financial information on an annual Form 1099-Q.
Do Students at Your School Qualify for Vouchers?
Many families live in areas offering vouchers, which are essentially publicly funded stipends that help pay the cost of education, giving parents more options when it comes to their children’s education.
Some states have offered vouchers for years, while others and even the federal government began offering them more recently.
Federal Vouchers
In 2025, Congress passed legislation creating vouchers with federal dollars, which will go into effect on January 1, 2027. Qualifying families earn less than 300 percent of their local area’s medium income and have a child going to school in a state that has opted into the program.
Currently, 27 states expressed interest in the program, including:
| Alabama | Louisiana | Oklahoma |
| Alaska | Mississippi | South Carolina |
| Arkansas | Missouri | South Dakota |
| Colorado | Montana | Tennessee |
| Florida | Nebraska | Texas |
| Georgia | Nevada | Utah |
| Idaho | New Hampshire | Virginia |
| Indiana | North Dakota | West Virginia |
| Iowa | Ohio | Wyoming |
This legislation will create another opportunity for families to create a tax exemption. Those who donate up to $1,700 to a scholarship-granting nonprofit organization will receive that amount in the form of a tax credit. Expect a new tax form to report contributions.
States with Vouchers
A handful of states have a private school choice program in place available to all K-12 students in the state. Here’s the state-by-state breakdown.
| Alabama | Iowa | Tennessee |
| Alaska | Minnesota | Utah |
| Arizona | Montana | Texas |
| Arkansas | New Hampshire | West Virginia |
| Florida | North Carolina | Wyoming |
| Idaho | Ohio | |
| Indiana | Oklahoma |
Many additional states (plus Washington DC and Puerto Rico) also offer similar voucher programs for less general scenarios.
Continuing Financial Compliance: Secure Payments
Private school tax forms and tuition assistance are only one side of financial compliance. Combining the two requires a secure payments solution that abides by the highest cybersecurity standards.
With VenturEd Solutions™, schools collect tuition, admission fees, donations, summer program registration fees, and more under a PCI-compliant suite of highly secure solutions.
Frequently Asked Questions
What Tax Forms Establish My School as a Nonprofit?
For new private schools, IRS Form 1023 determines whether your school operates as a nonprofit and qualifies for 501(c)(3) tax exempt status, based on your organizational structure, regular operations, and financial data. Every following year, your school must maintain that designation with Form 990.
Can Families Write Off Tuition Expenses on Their Taxes?
No, unless the family has a child attending a private school specifically for students with special needs, contingent on a doctor certifying the need for specialized education.
However, ESAs, QTPs, and voucher programs allow families to contribute pretax income and investments toward educational expenses, which in some states include private school tuition.
Will Families Attending My School Be Eligible for Federal Vouchers?
On January 1, 2027, the federal government will roll out its Federal Scholarship Tax Credit program. To qualify, a family must make no more than 300 percent of the median income in their area, and their student must live in a state participating in the program.
