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My kids go to a private school that's attached to a religious congregation. As far as paying tuition, they offered me a choice between these 2 deals:

  1. $1296 per month (for 12 months).
  2. $1156 per month (for 10 months) + plus make a one time $4000 tax-deductible donation to the congregation.

My stats (e.g. how much I make, etc...) are here. Which deal makes more sense when applying the deduction to my tax situation?

Additionally, I'll be applying to pay less in child/spousal support, since the kids are pretty much with me full time. So declaring one amount vs the other might make a bit of a difference (donations don't count though) - I don't know exactly how that's gonna play out. So only apply this variable if you know what it actually comes out to.

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NeedAdvice
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3 Answers3

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The total outlay in 1. is $15552 and in 2. is $15560, so if you had the $4000 (and ignoring forgone interest which is very low at the moment), then you'd only need $8 of savings from the tax deduction for it to be worthwhile - I suspect they set it up so that the numbers would be the same modulo rounding errors.

From your stats you probably don't have the $4000 up front, so you'd have to borrow it. Let's guess it might mean a 25% interest rate given your poor credit situation, and that you'd pay most of it back in the last 2 of the 12 months, so it'd cost you about $1000. I guess your tax bracket may mean that the savings from the tax deduction still make that worthwhile, but I'm not familiar enough with US tax to be sure.

Ganesh Sittampalam
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Does making the $4,000 contribution relieve you of other donations or volunteering to the congregation that you are customarily expected to make?

I don't know how the IRS would look at something like this. Is option 2 really a bona-fide deduction? Feels like something that could blow up in your face, particularly with an ex in the picture. Without an opinion from a qualified tax advisor, I would probably prefer option one.

duffbeer703
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I agree with Ganesh's answer.

Regarding the tax code, I don't see anything deductable in your finances--I think alimony is a direct subtraction, not a deduction. So if you itemize ONLY to claim the $4000, it will not rise to the level of the $5800 standard deduction, and thus will provide you no benefit tax-wise.

Phil Sandler
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