Summer camp serves as both a learning experience and a fun activity for your child, but it also has huge benefits for the parents. Working parents can save thousands of taxes, and enjoy other tax benefits, if they enroll their kid in summer camp.
Child And Dependent Care Credit
According to a report from CNBC, working parents can save more than $2,000 on their taxes by enrolling their child in summer camp. This is due to the Child and Dependent Care Credit, which give tax deductions to parents as high as $2,100 if they paid other people to care for their kid under 13 years old so they can go to work or school.
For one kid, parents eligible for the Child and Dependent Care Credit can file a tax return for as much as 35 percent of $3,000 in child care and camp costs. That deduction reaches $6,000 if you have two or more children. A 35 percent tax return means a reduction of $1,050 for one child and $2,100 for two or more children.
Don Crotty, a senior tax manager at Marcum LLP, said parents eligible for the credit should pay summer camps via an institution or a person with their address and federal tax identification number indicated on your tax return. Transportation money that is included in the summer camp's fees should be put on the tax return as well.
Who Qualifies And Who Doesn't
Aside from summer camp, the tax return also applies to athletic camps, music camps, mini camps and day-care programs. It should be noted, however, that the Child and Dependent Care Credit only applies to single working parents and to parents who are both working. The credit is not available for those who have a spouse at home capable of caring for the child.
Lisa Greene-Lewis, a CPA at TurboTax, said overnight or sleepaway camps are not recognized by the credit as well. This is because overnight camps don't qualify as day care.
Parents with children who are not big fans of the great big outdoors shouldn't fret though. The Child and Dependent Care Credit also covers the cost of daycare, a babysitter and other childcare providers, Money Magazine reported. You can claim Child and Dependent Care Credit by completing Form 2441.
The IRS has some exceptions to the credit's rules so more parents can qualify. For instance, the IRS waives the requirement if your spouse is a disabled adult. For the complete list of exceptions, refer to TurboTax.
