Tue, July 21, 2009
Summer Camp Costs May Qualify For Child Care Tax Credits
The IRS is drawing attention to the fact that the cost of sending your children to a summer day camp can qualify you for lower taxes via the child care tax credit.
Recently the IRS reminded parents of a seasonal application of the child care tax credit with “Five Tax Facts about Summertime Child Care Expenses.”
The maximum child care credit allowed depends on your income. The percentage of child expenses that can be applied to the credit varies according to a sliding scale that goes from an adjusted gross income of $15,000/year (35%) to $43,000/year (20%). Above $40,000 AGI a 20% credit applies. For one child under the age of 13, up to $3,000 in expenses qualify, if you have two or more children, child care expenses up to $6,000 can qualify for the credit. Admittedly, the credit is not huge – 20% of $6,000 is only $1,200 – but tax credits reduce your tax liability directly, unlike deductions.
If you must incur summer camp expenses because you work or are looking for work, the cost of a summer day camp qualifies for the credit. Overnight camp costs, unfortunately, don’t qualify as child care credit expenses.
Other child care expenses incurred during the rest of the year can also qualify for the credit, as long as the care enables the parent(s) to work or look for employment. Further details on the child care tax credit can be found at the IRS web site.
