Did you know that certain summer camp expenses qualify for the Child and Dependent Care Tax Credit? As the school year has come to a close, many parents with school-age children will find themselves looking for camps and other activities to keep their kids occupied over the summer.  With proper planning, your child’s summer camp fees may provide you with a reduction to your income tax liability.

Here are some of the highlights and restrictions on the Child and Dependent Care Tax Credit:

  • Qualifying Expenses for the Credit
    • Must be for the care of one or more dependent children under age 13
    • Must be to pay for the care so you or your spouse (if filing a joint tax return) can work or look for work
    • Can be for care provided at your home, a certified daycare facility or at a day camp
    • Expenses for before- or after-school care of a child in kindergarten or a higher grade
    • Education expenses for children below the level of kindergarten
  • Non-Qualifying Expenses for the Credit
    • Overnight camps
    • Summer school tutoring costs
    • Care expenses paid to:
      • Your spouse
      • Your child who is less than 19 years of age at the end of the year
      • A person you claim as a dependent on your tax return
    • Child support payments
    • Education expenses to attend kindergarten or higher grades
  • Earned Income Requirement
    • You and your spouse, if filing jointly, must have earned income. Earned income includes wages, salaries, tips and net earnings from self-employment.
  • Amount of Credit
    • The credit is calculated as 20% to 35% of your total allowable expenses.
    • The percentage allowed depends on your total income.
  • Expense Limits
    • The total amount of expenses that can be used to calculate the credit is $3,000 for one qualifying person or $6,000 for two or more. (This results in a $600 to $1,050 credit for one qualifying person and $1,200 to $2,100 for two or more.)
  • Recordkeeping Requirements
    • Keep all of your records and receipts for the filing of your tax return.
    • You will need the name, address and taxpayer identification number of the care provider.
    • You must complete Form 2441, Child and Dependent Care Expenses with the filing of your tax return.

Disclaimer: Please use your discretion before making any decisions based on the information provided above. Contact us today with your questions or if you want more information. With more than 65 years of experience, our Tax Services Group helps you comply with tax laws and regulations, minimize your tax burden and plan for your future.

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