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Summer Camp Costs May Qualify for a Tax Credit by Rick Bazzani, CPA

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Posted on August 11, 2017 by Rick Bazzani

Working parents may be able to offset some of the costs of sending their children to summer day camp when they qualify for the Child and Dependent Care Tax Credit. The credit, which is based on a taxpayer’s gross income, filing status, amount of allowable expenses and number of children, can be worth up to $2,100 for a family with two or more children and $6,000 or more in childcare expenses.

Following are a few tips to keep in mind:

  1. Qualifying taxpayers include those parents who either worked full time or were looking for work while their child attended summer camp. This rule applies to both spouses when the parents are married couples; if one spouse is a stay-at-home parent, a full-time student or if he or she is disabled and unable to work, the family will not qualify for the Child and Dependent Care Tax Credit.
  2. Qualifying children must be younger than 13 or they must be dependents who lived with a qualifying taxpayer for more than half the year and who are physically or mentally incapable of self-care.
  3. Qualifying costs include those a family incurs for sending their child to day camp or for those paid to an individual who provided care for a dependent child in the family’s home. Similarly, some families may qualify to apply the credit toward costs charged by the day camp to transport children to and from the campus. However, it is important to note that the credit will not apply to costs incurred for sending a child to overnight, sleepaway camp, and or to those costs a family spends on their own means of transportation.  In addition, families must be careful when hiring individuals to care for children in their homes, as these individuals may be   considered household employees for whom the families must withhold Social Security and Medicare tax and pay unemployment tax.
  4. Documentation required for families to claim the Child and Dependent Care Tax Credit include the name, address and taxpayer identification number of the camp or caregiver, which should be included with an annual tax return on Form 2441, Child and Dependent Care Expenses.

 

About the Author: Rick D. Bazzani, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where he provides individuals with a broad range of tax-efficient estate-, trust- and gift-planning services.  He can be reached in the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or at info@bpbcpa.com.