Summer Camp for your kids is fun AND tax deductible!

The joys of Summer are finally upon us. A myriad of park districts, churches and social organizations offer day camp for kids. The Child and Dependent Care Credit applies towards summer day camp just as it does towards child care during the year. The rub is that the credit cannot be used towards overnight camp and summer school. So, I thought I'd highlight some of the more pertinent points found in IRS Publication 503. Thus, the warm memories of summer may waft back into your mind next April 15th around 10:30pm!

• First we need to define the child or in IRS jargon, the "Qualifying Person". The child must be your dependent and under 13 years of age. So, if the Grandparents pay for day camp as a birthday present, they can't deduct it unless they can and do claim the grandchild as a dependent, which means no one else can. 
• Next, the day camp expense, just like preschool during year, needs to be a work related expense. This means that the parent, if filing Single (S) or both parents if filing Married Filing Jointly (MFJ), need to be working at the time, for wages, salaries, tips or self-employed. Also, if you are filing MFJ, one parent may be in school as a full-time student instead of earning an income. This helps soften the blow if one spouse is completing their degree and usually drops out of school during the summer. This may help that spouse take advantage of the summer session. Remember, this credit only applies towards earned income and not investment or passive income. However, if you are disabled and unable to work or are actively seeking employment, this credit may still be available to you.
• The credit is not available if you are are filing Married Filing Separately (MFS). However, you can file for the credit if you are filing MFJ and are legally separated or if you live apart from your spouse.
• This credit applies towards not only day camp, it also applies for care at home and day care facilities just as it would during the rest of the year.
• The credit can amount to as much as 35% of your expenses. The upside limit is $3,000 in total expenses for one child and $6,000 in total expenses for two or more qualifying children.
• Also, you can't game the system by trying to use the credit for care provided by your spouse or another one of your own children.
• Finally, don't forget the paperwork! Keep all of your receipts and be absolutely sure to get the SSN or Employer ID number of those who provide the care. Also, be careful, these rules change if you receive dependent care benefits from your employer.