Remember when you looked forward eagerly to summer? When you were finally released in June, you flew out those schoolhouse doors and didn’t look back! You didn’t realize how much your parents dreaded those months, with you at loose ends while they had to work.
Now you’re a parent. You have a job. While you wish you could spend all day with your child, someone has to make a living. What’s your best alternative?
Not only is it a great way to keep your child occupied, distracted, educated or entertained-but you just might be able to get a tax benefit from summer camp, too.
The cost of summer camp can be used toward the Child and Dependent Care Credit, taken on Form 2441. The purpose of the credit is to provide before-school, after-school or day care for dependents so parents can go to work or get an education.
First, the good news!
The credit can be worth 20 to 35 percent of $3,000 of expenses per year, per dependent, for up to two dependents. The percentage depends on your income.
Children must be under age 13 at the time they went to summer camp or received any qualifying care. The camp may provide a specialized activity, like soccer, chess or computer training-so you can toss in some focus along with the care.
Finally, this credit applies not just for children, but also for the cost of care for adults who are elderly or disabled.
Now the bad news:
1) There is no tax benefit for sending your child off to overnight camp for the summer. Why get a credit for summer day care and not overnight camp? Who knows? Logically, it should make no difference. Thank your D.C. legislators who’ve never had to pack lunches, wash muddy jeans or deal with stacks of wet towels all over the house. Or children tugging on your shirttails, yelling, “Mommy, Mommy, look at me!”
2) If you’re already paying for day care, after-school care, or private school, you’ve probably used up your cost allotment for Form 2441.
A word of caution: You must request the taxpayer ID number of the summer camp or care provider to put on the Form 2441, along with its name, address and telephone number (in some states). Get this information before placing your child in the camp’s care. We’ve heard from parents that some people get downright rude when asked for that ID number at tax time the next year. Turns out those care providers weren’t planning on reporting the income. Oops.
Summer is also a good time for remedial courses, or for special training for children with learning disorders or other physical or nervous issues that can be identified by a doctor. Those costs may be applied toward your medical expenses. If you have a flexible spending account at work, build these costs into your plan for next year. You could pay for up to $5,000 worth of “medical” expenses with pre-tax dollars. That could put about $1,500 right back into your pocket.
Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com.
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