It’s already the middle of May and summer is just around the corner. The kids are counting down the days until that bell classroomrings for the last time and school is out for the summer. Working parents don’t share the same love for the summertime that their kids do – they have to secure childcare to ensure that their youngsters have supervision while they’re working. If you’re one of the many parents who opt for summer camps to keep your kids occupied for the summer months, have you considered whether that expense could qualify as a tax deduction?

The answer is, yes, some of those camp costs could qualify as a tax deduction thanks to the Child and Dependent Care Credit. Let’s look more closely at some of those requirements and details.

Expenses that DON’T Qualify

I know we have mentioned that summer camps qualify for a deduction since they act as childcare. However, only CERTAIN summer camps will qualify. If you choose to send your child to sleep-away camp for a few weeks, you’re going to have to kiss that tax deduction goodbye. Only DAY CAMPS qualify for the deduction. Some other expenses that won’t qualify as a deduction are summer tutoring, care provided for your child(ren) by your spouse, care provided for your child(ren) by one of your other children who is under the age of 19, or care provided for your child(ren) by someone else whom you are claiming as a dependent. Also, keep in mind that transportation costs to and from the camp are not included as deductible expenses, unless however those expenses are built into the price of the camp itself. In that case, those included costs are deducible with the rest of the fee.

Child Must Meet the Qualifying Person Rule

In order for the camp to qualify as a deductible expense, the child who is attending must meet BOTH of the following criteria: he or she must be one of your dependents AND he or she must be under the age of 13.

summer campEmployment Status of Parents

In order for your childcare expenses (including summer camp) to be considered deductible, they must be incurred while you (as the parent) work full time, are pursuing full time employment (job-hunting), are incapable of caring for yourself, or are a full time student. This means that if your spouse typically stays at home with the kids and doesn’t work but you opt to send your child to camp for a few weeks during the summer, the expense isn’t deductible since your spouse is neither a full time employee nor a student.

Filing Status

In order to be able to claim this deduction, you’ll need to utilize certain tax filing statuses. You can file as a head of household, qualifying widow(er) with a dependent child, single, or married filing jointly. Essentially, the only filing status that won’t allow you to claim this deduction is “married filing separately.”

How Much is it Worth?

Depending on your income, the deduction is worth anywhere between 20% and 35% of the allowable expenses. Expense limits are $3,000 for one child, and $6,000 for 2 or more children. That means that you can claim a deduction anywhere between $1,050 and $2,100 (depending on your income, of course). Keep in mind that this is a non-refundable credit, meaning that it can reduce your tax liability to zero, but will not allow you to claim any sort of refund for any of the unused amount.

Records

Remember – keep any receipts or any other information on the summer camp you choose to send your child to. In order to claim the deduction, you’ll need some identifying information to list on your tax documents come tax season. Remember to jot down the name, address, tax ID number, and any other identifying information and store them with your receipts for next year’s tax season.

If you have questions on the ability to deduct certain expenses (whether they be childcare or other expenses), give our office a call today! Our tax experts can answer your questions and help you to develop a plan to save more tax dollars and keep more of your hard-earned dollars in YOUR pocket! Best of all, the consultation is FREE! Give us a call today!

Don’t miss a thing! Follow Wealth Builders on LinkedIn, Twitter, and Facebook for all things financial! If you haven’t already, sign up for our free quarterly newsletter and weekly “Tax Tips” email. Both are full of lots of great information and tips to help you keep more money in YOUR pocket by decreasing your tax liability and increasing your cash flow. Sign up today !

Ginita, Wall, and CFP. “Is This Tax Deductible? My Child’s Summer Camp.” The Turbo Tax Blog, 7 May 2018, blog.turbotax.intuit.com/tax-deductions-and-credits-2/family/is-this-deductible-my-childs-summer-camp-19801/.

“Keep in Mind the Child and Dependent Care Credit This Summer.” Internal Revenue Service, www.irs.gov/newsroom/keep-in-mind-the-child-and-dependent-care-credit-this-summer.