I know, I know…the subjects of fun summer camp and “funless” income tax preparation don’t exactly go together as well as toasted ‘mallow and graham. But for as painful as taxes might be, there is some value here for anyone that sent a child to camp last summer, or is planning to in the coming months.
You might think the first order of business is to answer whether or not summer camp is tax deductible. But actually, it’s important to first distinguish between tax credit and tax deduction. Both are good, but a deduction reduces how much taxable income you claim, while a credit directly reduces the amount of tax owed. For your benefit, I’m going to focus on the credit opportunity, because let’s face it…these are dollar for dollar reductions.
So long story short, summer camp expenses might actually help you qualify for a tax credit. It’s the Child and Dependent Care Credit, and it’s available for expenses incurred during the summer (up to 35% for a qualifying child under the ages of 13). Why does the credit exist? To help parents offset care expenses while they work (or look for work).
Before getting into the nitty-gritty, this is your chance to review everything I’m about to say in a more easily-digestible manner. Feel free to take a look at the summer camp tax credit infographic below, and if you need details, continue reading (and ultimately consult the sources mentioned).
How was it? Helpful? Great, here are the details.
Experts on Summer Camp Tax Breaks
I can sit here for hours and tell you every single thing I know about how you can qualify for the credit, but let’s face it, taxes are one of those things where you don’t really want to “take my word for it.” I get it!
The use of the term “day camp” here isn’t insignificant. Meaning, there is a difference between day camp and overnight camp, and overnight camp expenses don’t qualify. Reason being, the cost of overnight camp isn’t considered work-related (like day camp), and thus not applicable.
The good news? Day camp can usually mean anything from tech camp to chess camp, maybe even Harry Potter camp, and other highly-specialized summer programs. Again, as long as the main purpose of the camp is to provide care while you are working (or looking for work).
Plus, it actually goes beyond that. According to TurboTax, money spent on babysitters, cooks, or even housekeepers who provide child care can count towards qualifying expenses. The important thing to remember is that the care must be connected to the objective of allowing you to work, so babysitting or any other care arranged for personal reasons can’t be taken into consideration.
Sorry, there had to be some bad news in here somewhere! What does it mean? Basically, stay-at-home-parents and those who are unemployed are ineligible for the credit. As mentioned, the credit was established so working parents can have their children cared for during the day. If parents are home and not working, it eliminates the need for care during the day (so says the IRS).
Math?! There are too many variables to provide an example at this moment, but just know that only 35% of expenses can qualify. More specifics below.
So combining the two points above, you may qualify for a credit of up to 35% of qualifying expenses, but only up to $3,000 for one child. If you have two or more children, the credit can be 35% of qualifying expenses for up to $6,000. So, 35% of $3,000 is $1,050, which is the maximum credit for one child. That said, the 35% does decrease in relation to earned salary, reaching a minimum of 20% in most instances.
Filing Your Summer Camp Tax Breaks
- A federal form 2441 must be attached to form 1040, 1040A, or form 1040NR (No “EZ” returns).
- Child name and social security number must be presented on your forms to claim the credit.
- Lost deposits from enrolling a child in camp and then canceling won’t qualify as an expense.
- Whoever you are paying for care must be identified with a tax ID number. Find our # here.
- If the amount you owe in taxes is less than your credit, your credit can only zero out your bill.
Deducting Camp: Additional Resources
Here are some additional resources for you to consult regarding camp tax deductions and credits:
- IRS Can Help You Look After the Kids
- Deducting Summer Camps and Daycare with the Child and Dependent Care Credit
- Summer Camp Could be a Tax Deduction
- Paying for Summer Camp? Is Any of it Deductible?
- Child and Dependent Care Expenses
Please note: We specialize in technology camps, not tax preparation. We recommend that you speak with a tax professional before filing. The child and dependent care information above does not encompass any Flexible Spending Accounts your employer may have established at your company. Please check with your HR Department to find out if your company’s FSA plan covers day camps.