Sending kids to summer camp frees up parents’ time, but that’s not the only benefit.
Tax experts say that parents can get a tax credit for summer camp fees, but doing it right is a minefield with important restrictions. Taxpayers who understand how the credit works and the mistakes to avoid will find the most success.
That starts with understanding that qualifying summer camp expenses are a credit and not a deduction, said Joel Salas, a tax advisor at question-and-answer site JustAnswer.
“It's not really a deduction,” Salas told The Independent in an email. “It's part of the Child and Dependent Care Credit, so it's actually better news because the credit lowers your tax bill. versus a deduction, which is not dollar-for-dollar.”
Tax credit tips
The Child and Dependent Care Credit lets parents or caretakers - which includes organizations - of an eligible dependent earn a credit for what they pay toward childcare so they can look for a job or work, according to the IRS.
The IRS calculates the credit amount based on how much the expenses are multiplied by a percentage - up to 50 percent - based on the parent’s income. The maximum credit per child is $1,500, and $3,000 for two or more children, Salas said.
What counts - and doesn’t count
Those credits only apply to certain types of summer camps, said George Dimov, CPA and CEO of tax firm Dimov Tax. A common point of confusion is whether overnight camps are eligible for a tax credit.
“The IRS draws the line at whether the kid sleeps, so sleepaway is out and day camp is in,” he said in an email to The Independent.
Paying for a nanny or babysitter to watch children before and after summer school counts toward the credit, too, Dimov said.
Education-based school programs don’t count, though.
“Summer school and tutoring do not count, because that is education, not care,” he said.
Education exception
The child’s age matters, too, Salas said. The tax credit is typically available for kids under 13 years old, the IRS notes. There is no age limit for disabled spouses and dependents who can’t take care of themselves, according to the IRS.
Pick the right payer
Who pays for a child’s summer camp is important, Dimov said. A parent cannot get the summer camp tax credit if a relative or friend pays for the child’s camp fees.
If a relative paid the camp directly and you were never out any money, there's no expense for you to claim, Salas said.
Parents with friends or family offering to pay for summer camp should get the money directly from the friend or family member, then pay for summer camp out of their own account.
“If grandma wants to help or, you know, grandpa or aunt or uncle wants to chip in, they can just give you the money, and you pay for the camp,” Salas said. “Now, it's your expense, and you can claim it as long as you meet the normal rules.”
Salas’ last piece of advice? The person the parent pays cannot be the “child's other parent, your spouse or someone else that you claim as a dependent,” he said.
Know their number
Parents and caretakers can submit qualifying summer camp expenses using Form 2441, according to the IRS. Be sure to include the summer camp provider’s employer identification number (EIN).
“No EIN, no credit - and camps rarely hand it over until you ask,” Dimov said.
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