The usual advice is that the less you say, the better. Remember that while this is the absolute center of your personal universe, your child is just one child of 18 or 20 or whatever, and that's just for this year.
If you want to try to maintain a personal relationship with the teacher specifically, you might want to wait to tell her that you're pulling your DD out at the end of the day on your child's last day of school. If you aren't worried about the teacher personally, then I think I'd just call the school and announce your decision over the phone.
I wouldn't recommend telling anyone anything earlier than the last day of school for your DD, though. Imagine what it would be like to teach a child who has given you two weeks' notice, so to speak...awkward! All the school or the teacher really need to know is that your daughter is gone and there are no hard feelings. But the less you say, the easier it is to make a clean break. You don't want to put yourself in the position to be pressed for details, or worse, to be given the hard-sell as they try to keep your DD in class. Ugh. Less is more.
You can say something like, "We have decided to remove DD from the program for the rest of the year, but we appreciate all that you've done for her this year. Thank you!" is probably enough to dispell any potential bad feelings without requiring further explanation. They might be curious, but there are no bridges burned there. If further inquiries follow, be kind, be complimentary, but be evasive. Telling them the truth is probably not going to help you to maintain good relations, but you can't tell them lies either. The only option is to tell them nothing...in as nice a way as possible!
Just be sure you're honoring the contract you have with the school. Disputes over money are what burn bridges!
Good luck! I hope your DD has a better April and May now that she'll be out of that classroom.
