Summer Camp Deductibility

Ah, good old summertime – what a wonderful relaxing time of the year. Unless you have kids, of course, in which case there’s a whirlwind of activity in your house as soon as school is out. 

But then comes the blessed time of summer camp, when peace is restored for at least a few days. Although camp can be expensive, keep in mind that some of those expenses may be tax deductible. Rivermark breaks it down for you:

1. If you send the kids away to the mountains for a week, you won’t garner a tax deduction since overnight camps and programs don’t qualify. Summer day camps, however, qualify for the Child and Dependent Care Credit, if your child is under the age of 13 at the end of the tax year (no age limit if they are disabled) and you are sending your child to camp so you can work.
2. The Child and Dependent Care Credit enables you to work or go to school, so if you have a spouse at home to care for the children, then no deduction for camp. But if you are single, or you and your spouse both work, cha-ching, you’ll qualify for the tax credit.
3. Sending the kids into the backyard to camp out doesn’t qualify as camp. You must make payment for camp to a real institution or person, and you must include their address and tax ID number on your tax return.
4. Your transportation costs to get the kids to the camp location won’t qualify for the credit. But if the cost of transportation to and from camp is included in the fees, and the camp picks up and delivers, sweet – that qualifies for the tax credit.

So, if you qualify, what is the tax credit worth? To begin, tax credits are more valuable than tax deductions, since credits reduce your tax bill dollar for dollar, so the tax savings add up quickly. The Child and Dependent Care Credit ranges from 20% to 35% of what you spent on daycare up to the $3,000 limit for one child or up to the $6,000 limit for two or more kids. Your tax credit percentage depends on your adjusted gross income (AGI) so depending on your income, you may get a tax credit up to $1,050 for one child and up to $2,100 for two or more kids.

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