You may have already sent your children to summer day camp or are planning to in the upcoming month. While these summer camps can be pricey, the good news is that those costs may qualify for tax write-offs for your 2014 tax return.
Deducting summer day camp expenses
For 2014, parents that work and send their children to day camp can claim the child and dependent care credit of up to $3,000 or $6,000 for the care of two or more children under the age of 13. Parents with adjusted gross income that surpasses $43,000 are limited to a tax credit equivalent to 20% of qualified expenses, up to $3,000. For instance, if summer camp costs $5,000, you could claim a tax credit of $1,000 or 20% of qualified expenses. Even if you earned $1 million, you are eligible for the tax credit granted that your spouse also works, is looking for work or is a full-time student. That’s the big catch, both eligible parents must have earned income (employment income, not investment income), or is seeking employment, or is a full-time student. For those seeking employment, you will need to maintain documentation detailing your efforts to obtain employment.
Flexible Spending Accounts Can Also Be Used
You can tap into your flexible spending account (FSA) to pay up to $5,000 of your pretax income for summer day camp. Please note that you can only claim the child and dependent care tax credit for expenses that exceed the amount you have set aside in your flexible spending account.
Maintain receipts to claim the tax breaks
Any invoices and receipts you receive from the camp should be kept for tax reporting next April. You will also need the camp’s employer identification number for proper reporting. Don’t be afraid to ask them for this important information.
Do overnight summer camps qualify?
No, unfortunately the tax benefits only apply to summer day camps.
More questions? Browse answers or ask tax credit questions online.
Related Articles
->Tax Deductible Health Savings Account Contribution Deadline
->How Your Children Can Help You Save On Taxes
->Year End Flexible Spending Account Advice
->Back to School Money Saving Tips
->Financially Preparing Your Child For College
