It's been hot for months here in Houston and the kids have long been out of school but it is finally officially Summer. With the kids being out of school, Summer can become a real balancing act for working parents... Luckily, Uncle Sam wants to help by sending your children to Summer Camp!
How is Uncle Sam going to send my kids to Summer Camp?
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, 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!
And just one last thing...
Many of you don't know that I was a YMCA Day Camp Director while going through college. I managed a camp of 60 children and 5 counselors in the San Antonio summer son for 12 weeks. It was a wonderful job. At work at 7 am and out at 6 pm. No overtime pay. The experience taught me how to develop an entire business process, manage its activities and inspire people.
I also learned that children are little miracles. Each day they challenge you to bring your best because the more you bring, the more they learn from you... and the more they learn from you, the more you learn from them.