You’re a busy working parent. And then summer break starts up again. You might have friends or family helping out with child care during the summer months. But this is also when we have all types of different activities for the kids to try out. If you're concerned about the cost, you may be happy to know that summer camp is not only a great way for your kids to make the most of summer and allow you to keep working, but there are potentials for tax breaks too.
The Child and Dependent Care Credit
Taxpayers have the opportunity to claim the Child and Dependent Care Credit for their tax return each year, so don’t miss out!
This tax credit is designed to help offset the cost of enrolling your child in a day camp during the summer while the kids are out of school. Eligible families can be reimbursed for a portion of the expense, which can serve as a particularly nice kickback for families on a budget.
To qualify for the Child and Dependent Care Credit, you (and your spouse, if you’re filing jointly) must be employed or actively looking for work. That being said, if your spouse doesn't work and is either a full-time student or is disabled and incapable of self-care, you can still qualify for the credit. Generally individuals whose filing status is married filing separately will not be able to take the credit.
Another stipulation is that your child must be below age 13. They must also be your legal dependent, and live in your residence for more than half the year.
The Child and Dependent Care Credit can be applied toward just about any type of day camp. That summer soccer camp, chess camp, dance or theater camps, summer school, or even a simple day care are all fair game. Just remember: the camp/care program can’t include overnight stays.
Summer day camp costs are typically the most common way to use the credit, but you may have other options. Suppose you pay a housekeeper or a babysitter to provide care. Keep track of those expenses. You might even be paying a relative to care for your child. If the person isn’t your dependent, minor child, or spouse, you can still claim this credit. But in any case, it's always a good idea to consult with a tax professional. They’ll be able to confirm that your situation qualifies for the credit—and that you can secure the best savings possible.
How Much Could You Save?
The credit amount you can claim depends on the amount you spent on eligible expenses, as well as your adjusted gross income (AGI), and the number of children you have. Families can claim a minimum credit of $600 for one child on up to $3,000 in expenses, or $1,200 for two or more children on up to $6,000 in expenses if their AGI is greater than $43,000. If your AGI is less than that, the credit per child scales up to $1,050 and $2,100, respectively.
This is just one of many possible tax breaks related to children and dependents. If you have questions about this credit or would like to discuss any other tax savings ideas, consider reaching out to a tax professional for advice.
Our team at NSO & Company is dedicated to helping clients keep their tax liability low, and also lower the stress when it’s time to file. Let’s determine the best ways to take advantage of the available tax breaks—and hopefully save your family a nice amount of money!
