When school lets out, kids participate in a wide variety of
summer activities. If one of the activities your child is involved with is day
camp, you might be eligible for a tax credit!
Dollar-for-dollar savings
Day camp (but not overnight camp) is a qualified expense under
the child and dependent care credit, which is worth 20% of qualifying expenses
(more if your adjusted gross income is less than $43,000), subject to a cap.
For 2018, the maximum expenses allowed for the credit are $3,000 for one
qualifying child and $6,000 for two or more.
Remember that tax credits are particularly valuable because they
reduce your tax liability dollar-for-dollar — $1 of tax credit saves you $1 of
taxes. This differs from deductions, which simply reduce the amount of income
subject to tax. For example, if you’re in the 24% tax bracket, $1 of deduction
saves you only $0.24 of taxes. So it’s important to take maximum advantage of
the tax credits available to you.
Qualifying for the credit
A qualifying child is generally a dependent under age 13.
(There’s no age limit if the dependent child is unable physically or mentally
to care for him- or herself.) Special rules apply if the child’s parents are
divorced or separated or if the parents live apart.
Eligible costs for care must be work-related. This means that
the child care is needed so that you can work or, if you’re currently
unemployed, look for work.
If you participate in an employer-sponsored child and dependent
care Flexible Spending Account (FSA), also sometimes referred to as a Dependent
Care Assistance Program, you can’t use expenses paid from or reimbursed by the
FSA to claim the credit.
Determining eligibility
Additional rules apply to the child and dependent care credit.
If you’re not sure whether you’re eligible, contact us. We can help you
determine your eligibility for this credit and other tax breaks for parents.
© 2018
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