5 Ways to Make Summer Camp Tax Deductible

The Child and Dependent Care Credit offered by the Internal Revenue Service (IRS) credit allows families to claim as much as 35% of qualifying expenses up to $3,000 for one child or dependent and up to to $6,000 for two or more children or dependents. This can be very helpful when schools close, although you'll have to wait until tax time to collect the money. Many families struggle to secure childcare to fill workday hours. Summer camps are a great option, but the price tag can be hefty.

According to the American Camp Association, ACA-accredited camp fees can cost less than $100 up to as much as $1,500 per week. “Childcare is expensive, and the cost gives many parents pause about whether it's worth returning to the workforce,” says Matt Becker, a financial planner and founder of the blog Mom and Dad Money. “But the child and dependent care credit can make it a little easier for parents to keep working without putting too much stress on their budget.”

Of course, there are rules that guide what is deductible and what is not. Here are six factors to consider to make sure your child’s summer camp experience qualifies.

KEY TAKEAWAYS

• The Childcare and Dependent Care Credit can help defray the cost of child care.
• Summer camp fees may be tax-advantaged under the Child and Dependent Care Credit.
• The credit has a maximum of $3,000 for a single dependent child or $6,000 for two or more in a given year.
• There are several restrictions that apply for claiming the tax credit, including parents' employment status and the age of the child/children.
• You can only claim the cost of the camp and it must be a day camp. Overnight camps don't qualify.

1. Have Earned Income

Parents or guardians must have earned income that's reported to the IRS. You won't qualify for the credit if you're a stay-at-home dad and your wife works full-time or vice versa. If only one parent is employed, the other must be actively looking for work.

The custodial parent usually has the right to claim the credit if you're divorced, although some divorce settlements and decrees may handle this differently. The parent who claims this summer camp credit has to be working or actively looking for work. Check with your attorney and/or tax professional to make sure you're in compliance.

A few other important factors to consider to qualify for the credit include:

• There are no upper limits on income for claiming the credit.
• You cannot be married filing separately. Your filing status must be single, married filing jointly, head of household, or qualifying surviving spouse with a qualifying child.

2. Make Sure Your Child's Age Qualify

Although there's no income limit to bar you from claiming the credit, there is a threshold under which your child/children must fall for you to qualify. Children must be under the age of 13 and/or otherwise incapable of self-care. Older kids don't qualify.

3. Consider Day Camps Only

You can't count your child's month-long summer camp experience as a work-related expense. You can only claim the cost of day camps. But the type of day camp is irrelevant when it comes to claiming this tax credit. Sports, arts, music, or back-to-the-land nature camps all qualify.

Sleepaway camps don't count. You can't claim the cost of camps that require your kid(s) to stay overnight.

The cost of childcare doesn’t have to be equally split among your children.

Important: Whether it's gear for sports camp or paints and charcoal pencils for art camp, these items cannot be taken as deductions or counted toward the credit. You can't even claim that lime green T-shirt that your child must wear at camp. All expenses must be work-related to qualify. The expenses must allow you to work or look for work and they must be for a qualifying person's care.

4. Pay the Institution

Payments should be made directly to the institution that offers the camp. The payment should be made to the YMCA if your child attends a YMCA camp like the Tennis Day Camp for Kids.

Be sure to keep all your receipts and records of the time your child attended the camps. It probably doesn’t hurt to keep a copy of the payment, either.

You must provide the address when it comes time to prepare and file your tax return, as well as a federal tax identification number (TIN), either a Social Security number (SSN) or employer identification number (EIN), for the summer camp facility.

5. Use Form 2441 to Claim the Credit

You won't get this tax credit unless you fill out the proper form. You or your accountant must attach Form 2441: Child and Dependent Care Expenses to your Form 1040 or Form 1040-SR.

Tip: You can’t file for the credit until your child/children have attended their camp even if you pay for it upfront. Keep in mind that the credit amounts are for an entire year of childcare expenses, not just camp-related activities. Try not to wipe out the whole amount if you plan to claim the credit to help pay for summer day camps and think you may need it at some point later in the year.

What Is the Child and Dependent Care Credit?

The Child and Dependent Care Credit is a tax credit offered by the IRS to certain taxpayers who have expenses related to the care of qualifying children and dependents. Qualifying children must be under the age of 13. Dependents can also qualify if they are physically or mentally incapable of caring for themselves and lived with you for more than half the year.

You cannot claim the credit as a married couple who files separate returns and you (and your spouse if you file jointly) must have earned income. There are no income limits to be able to claim the credit.

What Types of Camps Qualify Under the Child and Dependent Care Credit?

The cost of any type of day camp is covered up to 35% of qualifying expenses up to $3,000 for one child or dependent and up to $6,000 for two or more children or dependents. You can claim the cost of sports camps, art camps, fitness camps, and any other type of day camps. Keep in mind that you cannot claim costs for overnight camps.

What Camp Costs Can I Claim Under the Child and Dependent Care Credit?

You can claim the costs related to the camp itself, such as attendance fees, but you can't claim any additional expenses under the child and dependent care credit. You can't claim the cost of materials like paint, notebooks. pencils, or paper if your child attends an art camp.

The Bottom Line

Working parents with school-age children can use the Child and Dependent Care Credit to help balance the high cost of summertime camps. The credit may help your tax bill next April, but it won’t lower the up-front costs of day camp. Be sure to check with your accountant or a tax expert if you have any questions regarding the credit.