Granted, I'm not a parent. But it doesn't take a genius to figure out that summer camp can be the next best thing for weary parents since the
Close to 6.5 million kids, ages three to 18, will go to camp this summer, according to Jeff Solomon, executive director of the
National Camp Association. About 65% of those kids are going to sleep-away camp.
But -- I had to ask -- can you get a tax credit for the costs of summer camp?
If you are eligible for the child and dependent care credit, you can include the costs of summer day camp as part of your childcare costs. But if your child goes to sleep-away camp, you can not include those costs, says Maggie Doedtman, a senior tax research and training specialist at
in Kansas City, Mo.
Why the distinction?
Day camp essentially is a substitute for regular daycare. But, sending your child away for the summer is a luxury, according to the
Internal Revenue Service
. (Although some may argue it's a necessity, but we'll save that discussion for the child psychologists out there.)
Do I Qualify for the Childcare Credit?
If you paid someone to take care of your child so you can work, you may be eligible for the child and dependent care credit. The maximum annual credit is $2,400 for one child or $4,800 for two or more.
You can't take this credit if you file as married filing separately. But you may qualify for the credit if you're single, married filing jointly, the head of a household or legally separated from your spouse. You also must answer
to the following questions to qualify:
- Was the childcare for one or more kids under 13?
- Do the kids live with you and your spouse?
- Did you and your spouse pay childcare expenses that allow you to work?
- Did you and your spouse pay someone who is not your dependent to watch your kids?
- Do you both have earned income -- like wages, salaries, tips and net earnings from self-employment?
While you need earned income to take this credit, Uncle Sam does cut you some slack when you're in between jobs or back in school. As long as you earn income at some point throughout the year, if you take a few months off to go back to school or look for a new job, you still can claim a credit for the childcare expenses you paid during the time you were out of work.
For more details on these requirements, check out page 210 of the IRS'
-- Your Federal Income Tax
I Qualify. Which Expenses Count?
If you hire someone who is not your dependent to watch your kid this summer, that's a childcare expense, says Bill Fleming, director of personal financial services for
in Hartford, Conn. So if you pay the child's grandmother or neighbor, that expense can be included in your childcare calculation.
Any kind of day camp also will count as part of your childcare expenses, because it essentially takes the place of a babysitter, says Doedtman. You cannot include your transportation costs to that childcare provider, however.
But if you paid someone to take care of your kid outside your home "at a camp where the qualifying individual stays overnight," forget it, says Doedtman. (See
Section 21(b)(2)(A) for more detail.) That's a "personal consumption expenditure" that isn't a necessary for you to go to work. So sleep-away camp is out.
Generally, expenses for education are not included in your childcare credit. But you can use the total cost of schooling below first grade as long as the cost of schooling cannot be separated from the cost of the child's care, reminds Doedtman. So, if you send your little one to nursery school and your bill does not break out the costs between daycare and education, include it all.
If your child is in first grade or higher, you must separate the cost of education from daycare. Only the costs of daycare should be included on your credit calculation.
When calculating your credit, be sure to exclude any benefits you received from your employer. In addition, include the costs you paid in this tax year only. So, if you had daycare expenses in 1999 that you did not pay until 2000, those expenses will count toward your childcare credit for 2000.
Be sure to keep track of your receipts and the daycare providers' identification numbers and check out
-- Child and Dependent Care Expenses
for more help with the credit calculation.
Have a safe, happy Fourth.
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