Summer Camp Tax Deductions: Kid-free and Tax Savings?

What if I told you Uncle Sam gives you a tax break for sending little Louise to soccer camp? Summer camps can qualify for the IRS’s Child and Dependent Care Credit, up to $3,000 for one child and up to $6,000 for two or more.

Now for the tricky parts. To receive the break, the program, child, and parents must qualify for the credit. Let’s break it down.

What Kind of Summer Camp?

The operative word in the Child and Dependent Care Credit is “care.” The IRS explicitly does not consider the following in care: education, food, lodging, clothing, and entertainment (IRS publication 503).

The big head scratcher on that list is education, since most day care programs have some element of education. The IRS says incidental amounts of the above list are okay. Where it draws the line are summer school programs, tutoring, and the like for students in kindergarten and higher (all pre-K programs qualify). Also, overnight camps are disqualified from the credit.

Who Are Qualifying Children/Dependents?

Generally, your child must be under 13 and either live with you for more than half the year or you provide more than 50 percent of their financial support. Expenses for a dependent, that is a qualifying relative who is physically or mentally unable to care for themselves, also qualify for this tax credit.

And Finally, The Parents
The goal of this credit is to put more money in the pockets of parents who are working or looking for work. There are some pretty clear cut rules to make sure this credit is going to the correct families, but let’s try to keep it simple for now:

  1. Each parent must have earned income meaning they worked and received wages, salaries, tips, etc. See the IRS’s list of non-earned income (think interest, dividends–income you didn’t “work” for.
  2. If you didn’t have earned income (i.e. didn’t work) but had expenses looking for work, then you can claim the credit.
  3. If you didn’t work but were a full-time student, you’re eligible as well.
  4. If a parent is mentally or physically disabled, they are exempt from the earned income requirement.
  5. You must file your taxes as Married Filing Jointly. If you file separately, no tax credit.

Happy Summer!

It goes without saying that taxes are complicated, and this credit is no different. I haven’t detailed all the ins and outs. As always, I recommend you consult a CPA on all tax matters. Disclaimer: I am a CPA and I own an accounting firm here in NYC. For FREE, customized tax tips try my mobile web at Visor Visor!!

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About the Author

Dave Burton, C.P.A.

As the NYC managing partner of Burton & Co, CPA’s, Dave likes empowering people to learn more about their tax obligations, record-keeping, and all the awesome tax law that might help you save money. Dave and his team run a full-service public accounting firm that has been serving clients of all shapes and sizes since 1981. Dave holds joint Master’s and Bachelor’s degrees in accounting from the University of Florida (it was really hard, don’t do it!), C.P.A. licenses with FL and NY, and created Visor Vision (www.visorvision.co) – a FREE, customized mobile app for freelancers to learn about taxes. Try it out today!

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