Ah, summer … two months of fun and freedom for the kids, two months of supervision woes for the parents. Summer camps can help with childcare issues while heading off the inevitable “I’m bored” complaints. They’re a fun solution to the summer childcare problem, but do camps offer any tax breaks for parents? Actually, the answer may be yes! But before looking specifically at summer camps, let’s review the rules for deducting childcare expenses in general. (If your older child has landed a summer job, check our previous article for some important tax tips for them.)
The nonrefundable Child and Dependent Care Credit is potentially available to taxpayers who incur childcare expenses for dependents under the age of 13. As with all tax matters, the rules can get complex, but in general, expenses up to $3000 for one dependent or up to $6000 for two or more dependents can qualify for the deduction. The taxpayer’s AGI determines the value of the credit, which can range from 20 to 35 percent of qualifying expenses. Expenses must be reduced by any employer-provided childcare benefits. The credit is only available to taxpayers (and spouse, if filing MFJ) who have earned income. See this IRS webpage for more information.
The good news is since day camps are essentially fun childcare, their fees usually count towards the credit. Unfortunately, overnight camps, though they do provide much-needed mini-vacations for parents, don’t meet the requirements for the childcare credit. Neither do costs for transporting kids to and from camp; however, any fees the camp charges for taking the childern on field trips can be a qualifying expense.
Summer camp fees can vary widely, but parents with more than one qualifying child need not worry about spending the same amount per child to get the credit. The $6000 limit for families with 2 or more qualifying children is a total; if one child’s swim camp costs more than the other’s art camp, it doesn’t matter since both are added together to come up with total expenses. Of course, qualifying childcare costs from throughout the year also count towards the limit.
Since most camps require deposits well in advance of the event, what happens if your plans change and your child doesn’t attend? Because no actual childcare was provided, forfeited fees are not deductible. Likewise, the credit only applies to your dependents; paying to send the neighbor’s annoying kid away to camp may buy you some peace but it won’t give you a tax break. However, donations to send children to camps run by charitable organizations (ie. churches, Boys and Girls Club, etc.) are charitable deductions for taxpayers who itemize.
Taxpayers who claim the Child and Dependent Care Credit must list the names, addresses, and tax IDs of care providers. Make sure you obtain this information from any camps your child attends. Registration and actual camp fees are deductible; the cost of items your child needs to attend the camp, such as fans, special sports equipment, or spending money, is not deductible since these are personal expenses.
It’s not often that parents can get a tax break for letting their kids have fun, so enjoy all the benefits of summer camp. Since we at Down South are too old to go to camp, we’ll be here to answer any questions you have about this or any other tax issue. … but we can’t promise we won’t be out back roasting hot dogs and making s’mores!
