Plans for summer vacation have already started to surface. Summer camp forms will find their way to your child’s backpack and your wallet. Don’t fret. Some of these expenses may be eligible for a tax credit on your next tax return. How do you ask? Well, the child and dependent-care credit can also be used for summer day camp expenses.
The child and dependent-care credit applies to expenses you incur for the care of children under age 13 while the parents are working. If you're married, the IRS requires both of you to be employed (employee or self-employed) or seeking a job. The only exception is when one spouse is either a full-time student or is physically or mentally incapable of self-care.
Don't limit yourself to the traditional types of day camps or summer camps. There are many other programs that qualify, including:
Sports camps: baseball camp, basketball camp, soccer camp, football camp, volleyball
Academic camps: computer camp, etc.
Fine arts camps: music, drama, band and art
The important requirement for qualifying for the child and dependent-care credit is that the camp must not be a sleep-over camp.
You take the credit on Form 2441, Child and Dependent Care Expenses. In most cases, married taxpayers who file separate returns cannot claim the child and dependent-care credit. You cannot use Form 1040EZ if you claim the credit.
The amount of your credit depends on your income. Look at Form 2441 to calculate your credit.
First, take your adjusted gross income from Line 37 of Form 1040. If your income is greater than $43,000, your credit is likely to be 20% of the summer day camp expense. (If your income is less than $43,000, the percentage is greater than 20%, so be sure to check Form 2441 if you happen to be at that income level.)
Next, multiply the summer day camp expense by 20%, and that's the "potential" tax credit amount. "Potential" because if your income is greater than $43,000, your maximum child and dependent-care credit related to all daycare and summer day camps is $600 if you have one child and $1,200 if you have two or more children.
The bottom line is that if you have $1,000 of summer day camp expenses for this summer, you get a $200 tax credit on your personal income tax return.
To access Form 2441, visit http://www.irs.gov.pub/irs-pdf/f2441.pdf
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