Despite ending April with a snow storm, summer is quickly approaching. For some taxpayers, that means finding summer camps to keep their kids’ busy once school is out. Some of these activities may qualify for a tax credit. The dependent care credit allows for up to 35% of $3,000 in qualifying child care expenses for one child and $6,000 in qualifying child care expenses for two or more children.
If you send your child to a day camp and you meet certain eligibility requirements, you can apply those day camp expenses towards the dependent care credit. Recently, the IRS released some tips to assist with understanding the circumstances in which summer daycare expenses qualify for the Child and Dependent Care Tax Credit. Here are a few guidelines:
The care expenses must be so the taxpayer can work or look for work.
The care must be for a qualifying person. A qualifying person can be your child that was under the age of 13 when the care was provided. A qualifying person can also be a spouse or dependent that lived with you for over half of the year and was physically or mentally unable to care for themselves.
The expenses must be considered for the care of the child. Summer school and tutoring programs would not be considered for the care of the child.
Day camps may qualify. However, overnight camps are not considered qualified expenses.
The taxpayer, and their spouse if filing jointly, must have earned income for the tax year, special rules apply to a spouse who is a student or disabled.
A filing status of married filing separate does not qualify for the dependent care credit.
You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. If you make payments to your child, your child must be age 19 or older by the end of the year and may not be claimed as your dependent.
You must identify the care provider on your tax return. You will need their name, address, and social security number or employer identification number.
Similar to other tax credits, there are numerous details that a taxpayer should understand to claim a tax credit. Please consult with your tax advisor to make sure that you are following all IRS rules and regulations correctly.