Kids are expensive enough, especially if you're not taking advantage of a tax credit that may save you thousands of dollars. If you're sending your children to summer day camp, don't forget the Child and Dependent Care Tax Credit.
According to the IRS, you may qualify for a federal tax credit for day camp costs up to 35 percent of your allowable expenses. That adds up to a $3,000 credit for 1 child or $6,000 for 2 or more.
Here are 6 things you need to know about claiming a credit for child and dependent care expenses.
- The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 13 or younger when the care is provided.
- The care must be provided so you--and your spouse if you are married filing jointly--can work or look for work.
- Speaking of employment, you have to have earned income to be eligible for this credit. If you're filing jointly, your spouse must also be employed or be a full-time student, unless they are incapable of self-care.
- This should go without saying, but the payments for care cannot be paid to your spouse. So much for Daddy Day Camp! It also doesn't count if you're paying your 16-year-old, or another older dependent, to watch over a younger sibling.
- You'll need to identify the camp/care providers on your tax return, including name, address and taxpayer ID number. This tax organizer can help you keep those records in one place.
- Your filing status may be single, head of household, or a qualifying widow with a dependent child. If you are married, you file a joint return, unless an exception applies to you.
Overnight camps and tutoring don't count for this credit. However, if you pay for home day camp so you can work, your costs may qualify if the caretaker is not one of your dependents.
Your tax preparer should know all the rules of the Child and Dependent Care Credit, and to do some research on your own, check out Publication 503.
Now that you're saving money on your taxes, you can focus on the true meaning of summer camp--fun!
Enjoy the journey... with more money in your pocket.