Summertime Child Care Expense Tax Savings


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Any bookkeeping, business or tax article contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor can it be used to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

Summertime Child Care Expense Tax Savings

Did you know that if you pay for summertime child care expenses, you can deduct them from your taxes and get some summertime child care expense tax savings? I know it’s not the most cheerful topic to think about with warm weather on the horizon, but it is important.

You’ll need to keep a log of all your child care expenses so that you can keep track of them and make sure they qualify as deductions. If you’re using a babysitter or nanny, keeping receipts is a must. If you’re paying for daycare at a facility or facility-based pre-school program, again, keep receipts—even if it’s just one per month—and save them for tax season. If you sent your children to a summer camp, it could also be a deductible expense.

And don’t forget about any work-related childcare costs—if you have to pay for childcare because of your job or business (or even if someone else in your household does), those costs could be deductible as well!

If you plan to send your children to summer camp or to daycare, here are some things that you need to know about the Child and Dependent Care Credit:


Both you and your spouse must be employed or actively looking for employment

To qualify, both you and your spouse must have an “earned income” reported to the IRS. If only one of you is employed, you do not qualify for the credit. However, when it comes to claiming the credit, there are no upper limits on income. If you’re divorce, only the parent who has custody of the child can claim the tax credit, but this would depend on the settlement of the divorce. If you are unsure if you are qualified to claim this deduction, you need to get in touch with your Enrolled Agent.


Child must be 13 years old or under

The Child and Dependent Care Credit is a tax credit that can be applied to your tax returns if you have a child under 13 years old.

However, you may not qualify for the credit if your child is older than 13. The IRS states that “if your qualifying person is permanently disabled or chronically ill, then the age limit does not apply.”


Day camps only

You can’t count the cost of sending your child to camp as a work-related expense. That said, the type of day camp—sports, arts, music or back-to-the-land nature camps—is irrelevant. All qualify for the credit.

Now, if you’re thinking about sending your kid off for a month at an overnight camp, that’s another story. That will incur some costs that are not eligible for the credit because they’re considered personal expenses.


Camping supplies don’t count

It’s really important to know the rules about tax deductions and credits. Otherwise, you might end up with a big fat bill from the IRS.

The IRS has very specific rules about what expenses can be deducted or counted towards a credit. And those rules are different for each deduction and credit.

For example, if you’re planning on buying sports gear for your child’s summer camp, that might be deductible—but only if it’s a qualifying item for their care (like swimsuits or tennis shoes). If it’s just a pair of sneakers or an iPod, then it can’t be deducted.

But what if they need something else? For example, what if they need paints and charcoal pencils in order to paint at camp? In that case, those items would also not be deductible because they’re not related to the child’s care—and they’re not work-related either (even though they may help them make money).


Summertime camp payments must be made to a qualified institution

First, make sure you keep all of the receipts and records for the time your child attended the camp. You’ll need these in order to file your taxes and get your child’s tax refund. It probably doesn’t hurt to keep a copy of the payment as well—you’ll need that information when filing taxes.

Second, be sure to include an address for the summer camp facilities on your tax forms. The address should include the city, state, and zip code where the camp is located. If you paid via check or money order, including both of those details as well.


File Form 2441

To properly claim tax credits for this kind of expense, you or your Enrolled Agent must attach IRS Form 2441 to your Form 1040 or Form 1040-SR. If you have any questions regarding this credit, don’t hesitate to contact your Enrolled Agent.


Bottom line

If you’re a working parent, this Child and Dependent Care Credit can help you offset the high cost of summertime camps but bear in mind that this won’t lower your expenses outright. The credit will only be deducted from your tax bill come April. So make sure you save up ahead of time!

Got more questions regarding the Child and Dependent Care Credit? Get in touch with us and we’ll send our Enrolled Agent your way!


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