Does the cost of summer camp qualify for the child-care tax credit?
It can. You can claim the dependent-care tax credit for the cost of day camp if your children are younger than 13 and you're sending them to camp so you can work or look for work (the cost of overnight camp doesn't count). What you spend for day care, preschool, before- or after-school care, a nanny or other baby sitter while you are working also counts toward the credit. You must have earned income to qualify for this credit and, if you're married, both you and your spouse must have a job or be a full time student.
The size of the credit depends on the number of children and your income. You can count up to $3,000 in child-care expenses for one child or $6,000 for two or more children. The size of the credit gradually decreases as income increases. Families earning less than $15,000 can take a credit for up to 35% of those expenses; families earning more than $43,000 can deduct 20% of the eligible costs. So if you have two children and pay more than $6,000 for care, you can claim a $1,200 credit if you earn more than $43,000. This is a credit -- not a deduction -- so it lowers your tax bill dollar for dollar.
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To claim the credit, you'll need to file Form 2441 with your tax return (see the 2008 Form 2441 for the basic information; the 2009 form should be available in the fall). You'll need to know the care provider's employer identification number or Social Security number. For more details about which expenses qualify - especially if you work part-time or get child-care benefits through work - see IRS Publication 503 Child and Dependent Care Expenses and the instructions for Form 2441.
If you use a flexible spending account at work to pay child care expenses with pre-tax money, you can tap that account to pay qualifying summer camp costs instead of claiming the credit.
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