“Summertime, and the living is easy,” goes the song, but for working parents, summer is anything but simple. When schools close, many families struggle to secure childcare to fill workday hours. Summer camps are a great option, but the price tag is a hefty one. According to the American Camp Association, day camps can cost an average of $199 per week, up to $800 per week or more.
One way to help defray these costs is the Child and Dependent Care Credit offered by the Internal Revenue Service (IRS). “Childcare is expensive, and the cost gives many parents pause about whether it's worth returning to the workforce,” says Matt Becker, a financial planner and founder of the blog Mom and Dad Money, on a blog for TurboTax. “But the child and dependent care credit can make it a little easier for parents to keep working without putting too much stress on their budget.” (For more, see: Tax Credits for Families.)
- Under certain situations, summer camp expenses may be tax advantaged under the child and dependent care credit.
- The credit has a maximum of $3,000 for a single dependent child or $6,000 for two or more in a given year.
- Several restrictions apply for claiming the credit, including parents' employment status, childs' age, and status of the camp as a day camp.
6 Tips to Make Summer Camp Tax Deductible
This credit allows families to claim up to 35% of qualifying expenses – or up to $3,000 for one child or dependent, and up to $6,000 for two or more children or dependents. (Note that the cost doesn’t have to be equally split among the children.) Of course, there are rules that guide what is deductible and what is not. Here are six ways to make sure your child’s (or children’s) summer camp experience qualifies:
1. Both parents must be working or actively looking for work.
Parents or guardians must have “earned income” that is reported to the IRS. If you are a stay-at-home-dad and your wife works full time – or vice versa – you do not qualify for the credit. But there are no upper limits on income for claiming the credit. If you're divorced, the custodial parent usually has the right to claim the childcare tax credit, though some divorce settlements may handle this differently. Needless to say, the parent who claims this summer camp credit needs to be working or actively looking for work. Check with your attorney and/or tax preparer to make sure you are in compliance.
2. Children must be under age 13.
Older kids do not qualify when it comes to using this tax credit.
3. Only day camps count; sleepaway camps are not allowed.
Sending your child away for a month cannot be counted as a work-related expense. That said, the type of day camp, in terms of the credit, is irrelevant – sports, arts, music or back-to-the-land nature camps all qualify.
4. Camping supplies do not qualify.
Whether it's sports gear, paints and charcoal pencils for art camp, or even a lime green camp t-shirt, these items cannot be taken as deductions or counted towards the credit. Expenses must be work-related in order to qualify. The expenses must allow you to work or look for work, and they must be for a qualifying person's care.
5. Payments must be made to an institution (i.e. YMCA Tennis Day Camp for Kids).
Be sure to keep all receipts and records of the time your child attended the camps. It probably doesn’t hurt to keep a copy of the payment, either. When it comes time to file your taxes, you’ll need to provide the address, plus federal tax identification number (either a Social Security number or employer identification number) for the summer camp facilities.
6. You must file a Form 2441 to claim the credit.
To claim a credit for these expenses, you or your accountant will need to attach federal Form 2441 to your Form 1040 or 1040-SR. Be sure to check with your accountant or a tax expert if you have any questions regarding the credit.
Camp This Summer, Tax Credit Next April
Unless your kids went to day camp last summer, don’t get too excited about filing for the credit this year. You can’t file until your child or children have actually attended camp. And keep in mind that the credit amounts are for an entire year of childcare expenses, not just camp-related activities. If you are planning to claim the credit to help pay for summer day camps and think you may need it at some point later in the year, try not to wipe out the whole amount.
The Bottom Line
Working parents with school-age children can use the Child and Dependent Care Credit to help balance the high cost of summertime camps, but remember to save up for it ahead of time. The credit may help your tax bill next April, but it won’t lower the up-front costs of day camp. (See also: Benefits of a Dependent Care Flexible Spending Account.)