Summer is a time when many parents and guardians experience greater childcare needs. With schools being closed for the season, many caretakers choose to send their children to summer camp. And while summer camp can be costly, it sometimes qualifies as an often overlooked tax break.
Tax Credit for Summer Camp
In some cases, parents and guardians can claim the federal child and dependent care credit when they pay for summer camp. To claim the credit, your costs must be considered qualifying childcare expenses.
- Children over 13 do not qualify for the tax credit.
- Overnight camps do not qualify.
- Summer camp must be used as childcare (for example, when stay-at-home parents send children to summer camp, the cost will not qualify).
Note: Tutoring and education programs do not qualify unless below kindergarten level. However, specialty camps do qualify (for example, math camp, computer camp, etc.).
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Child and Dependent Care Credit 2024
The child and dependent care tax credit is a nonrefundable credit. That means that while it can reduce your federal income tax bill, you can’t receive the credit back as a tax refund.
- Eligible taxpayers can claim up to $3,000 of eligible childcare expenses for one child.
- If you pay for childcare for two or more children, you can claim up to $6,000 of expenses (maximum amount regardless of the number of children).
- Only work-related childcare expenses qualify (so you can work or actively look for work).
The credit is worth up to 35% of the childcare expenses you claim. However, this percentage is gradually reduced to 20%. If your adjusted gross income is more than $43,000, your credit is 20% of your eligible childcare expenses (up to the $3,000 or $6,000 limit).
Can FSA Funds be Used for Summer Camp?
A dependent care flexible spending account (FSA) is a work benefit that allows parents and guardians to pay for eligible childcare expenses with pretax dollars. For 2023, parents and guardians can contribute up to $5,000 (or $2,500 from each spouse if married filing separately) to their dependent care FSAs.
Dependent care FSA funds may be used for summer camp in many cases. Your child must be under 13, and camp costs must be a work-related expense. Additionally, you must claim the child (or children) you’re claiming expenses for as a dependent on your tax return. If you have a dependent care FSA, you can also use the funds for other qualified services.
- Babysitting expenses qualify
- Daycare costs qualify
- Preschool tuition qualifies
- Preschool application fees may qualify
Child and Dependent Care Credit vs FSA
You can use a dependent care FSA and still claim child and dependent care expenses on your federal tax return. However, you can’t use the same expenses for both. For example, if your childcare expenses are $8,000 or more, you can use $5,000 of your FSA funds and use the remaining $3,000 to calculate the child and dependent care credit.
You can take advantage of a dependent care FSA only if it is offered by your employer. But most taxpayers can claim the child and dependent care credit, even if they don’t have an FSA.
Parents and guardians with an FSA may pay less in taxes throughout the year (which can result in higher paychecks). With the child and dependent care credit, parents and guardians must wait until they file their federal tax return to receive the tax break.
-
I'm want to give my 3 grandkids $5K each for Christmas.You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us?A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
Are You Middle-Class? Here's the Most Tax-Friendly State for Your FamilyTax Tips We found the state with no income tax, low property tax bills and exemptions on groceries and medicine.
-
Social Security Benefits Quiz : Do You Know the IRS Tax Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
-
Capital Gains Tax Quiz: How Well Do You Really Know IRS Investment Tax Rules?Quiz Take our capital gains tax quiz to test your investment taxes knowledge. Learn about loss rules, holding periods, and tax incentives that could impact your savings.
-
6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't)Retirement Taxes Here’s how converting your traditional retirement account to a Roth IRA can boost your nest egg — but avoid these costly scenarios.
-
Could Tax Savings Make a 50-Year Mortgage Worth It?Buying a Home The 50-year mortgage proposal by Trump aims to address the housing affordability crisis with lower monthly mortgage payments. But what does that mean for your taxes?
