If you're in Texas and you've been outside lately - you know what time of year it is... Summer. With the summer heat comes your children's summer break from school. Keeping your children entertained while you are working can be quite a balancing act, which is why many of our clients choose to send their children to Summer Camp....
Most of you already know that you get a tax break when you send your child to day care - but did you know your child's summer camp could also provide a deduction?
How is Summer Camp Deductible?
Many parents take advantage of the child daycare credit, AKA - The Child and Dependent Care Credit... Well, this same credit can also be used for summer camp expenses! But before you go shipping your kids off to a 2 week sleep-over camp, there are rules - as usual.
Am I eligible?
First, your family must qualify....
- Your child must be 13 or under.
- If you're married, you must file jointly and both be working, looking for work or attending school full-time.
- If you're a single parent, you must be working, looking for work or attending school full time.
Second, the camp must qualify....
- Most day camps are eligible for the credit.
- Overnight camp is not eligible.
- Tutoring and summer school are not eligible. Preschool and daycare are eligible, but if your child is in preschool or daycare, you are probably maxing out this credit already.
How much is this credit?
As always, there is a limit of how much you can deduct. The amount of your credit depends on a couple of factors... How many children you have and how much money you make.
If you have one child, you can claim up to $3,000. For two or more, the amount is $6,000 of the qualified child care expenses paid during the year.
Depending on your income, you can deduct 20%-35% of your qualifying child care expenses with the lowest deduction being 20% for "high income earners" (over 43k a year).
For example: you have one child and you spent $5,000 on Summer camp, only $3,000 will be deductible. Then you will need to multiply that 3,000 by your income percentage; let's say its 20%, so the actual tax credit that you can claim on your personal income tax return would be $600 (3,000 x .20).
Not too bad... Especially, since this is a credit and not a deduction, and will actually lower your tax bill dollar for dollar.
There is also an additional form required by the IRS to take advantage of this credit. As always, give us a call if your considering using this credit or have questions about any of your Summer expenses!
If You Don't Have Children Who Go to Camp
As my long time readers may remember, I worked for the YMCA as a Day Camp Counselor and Director in San Antonio while attending college. One two week session was dedicated to under privileged children who would never have had the opportunity to go to camp were it not for donations from people like yourselves. These kids were so very thankful for the opportunity. They learned to swim, learn about nature and were exposed to parts of the world they would never have been exposed to had it not been for this opportunity.
I would like to encourage you readers who have the extra money this summer to consider sponsoring a child to attend summer camp. If you donate money to a qualified 501(c)3 charity, you can deduct your charitable contribution. Most summer camps are 501(c)3 charities and thus qualify. So consider donating money to a camp so a kid can get a chance to go to camp that would not otherwise have that chance. If you make it a company fund raiser, you will improve moral and do something good for the community all at the same time.