Tax Credits Can Offset Summer Day Camp Costs

The summer months can be an expensive time of year for many parents and caregivers who are tasked with entertaining their children while school is out. The good news is that some of these costs, including expenses for summer day camps, can often be offset by certain tax credits, including the Child and Dependent Care credit.

The Child and Dependent Care Credit 

Families in the U.S. who pay someone for childcare services so that they can work are often eligible for the Child and Dependent Care Credit. Those who qualify can reduce the amount of taxes they owe by claiming this credit on their yearly tax return. While many people think that this credit only applies to daycare and similar services, the reality is that parents and guardians can also apply the cost of summer camps towards this credit.

Eligibility for the Credit 

Working parents who need to arrange for the care of children under the age of 13 years old can count the cost of summer day camp programs towards this tax benefit. Overnight camps, however, do not qualify as a deductible expense under the Child and Dependent Care credit. To be eligible for this benefit, taxpayers must have earned income and live in the U.S. for at least half of the year. In fact, the amount of the credit for which a person qualifies is directly linked to income and a percentage of the expenses incurred by the taxpayer while working.

The Amount of the Credit 

Depending on their income, eligible taxpayers could receive a credit worth up to 35 percent of their childcare expenses, including the cost of summer day camps. At a minimum, 20 percent of those costs are deductible (up to $3,000 for one qualifying person and $6,000 for two or more). It’s important to note that the amount of childcare expenses used to calculate the credit cannot be more than the amount of income earned by the taxpayer.

Claiming the Credit 

Eligible taxpayers who qualify for the credit and who send their children to day camps this summer will be required to list the name and address of the camp in question when filing their return. They will also need to include their taxpayer identification number, the cost of the camp, and information about their income.

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Childcare costs can be expensive, especially during the summer months when older children are no longer in school during the day. Fortunately, taxpayers who pay for childcare during these months, or who send their children to day camp can recoup some of those costs by claiming the Child and Dependent Care Credit, which applies to these expenses if they are incurred while the taxpayer is working. For help calculating how much you could claim on next year’s tax return, or to learn more about other child-related tax benefits, please call 386-490-9949 and set up a one-on-one consultation with experienced CPA, former FBI Special Agent, and dedicated Florida and nationwide tax return preparation lawyer Ronald Cutler, P.A. today.

Sources: 

irs.gov/newsroom/child-and-dependent-care-tax-credit-can-help-offset-summer-day-camp-expenses

irs.gov/credits-deductions/individuals/child-and-dependent-care-credit-information