Day Camps & Your Tax Return

 

Day camps are common during the summer months. Many parents pay for them for their children while they work or look for work. If this applies to your clients, their costs may qualify for a federal tax credit that can lower their taxes. To qualify for the Child and Dependent Care Credit, their expenses must be for the care of one or more qualifying persons. A dependent child or children under age 13 usually qualify. The taxpayer’s expenses for care must be work-related. This means they must pay for the care so they can work or look for work. This rule also applies to a spouse if the taxpayers file a joint return. Spouses meet this rule during any month they are a full-time student. They also meet it if they’re physically or mentally incapable of self-care. The taxpayer must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Their spouse must also have earned income if they file jointly. Spouses are treated as having earned income for any month they are a full-time student or incapable of self-care. This rule also applies to the taxpayer if they file a joint return.

Generally, married couples must file a joint return. An individual can still take the credit, however, if they are legally separated or living apart from their spouse. They may qualify for it whether they pay for care at home, at a daycare facility or at a day camp. The credit is worth between 20 and 35 percent of their allowable expenses. The percentage depends on the amount of their income. The total expense they can use in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.