Parents – Tax Break for Sending Kids to Day Camp
Posted by Chad BordeauxFriday, July 25th, 2008
Many parents are utilizing day camps for their school aged children who are home over the summer. For those parents that have children in these day camps, do not forget to keep up with the cost of these camps. They can count toward the child and dependent care credit on your tax return. Also note, that the children must be under the age of 13 years of age to qualify. Please note that expenses for camps which include overnight stays do not count toward the Child and Dependent Care credit.
Generally speaking, this tax credit is 20% to 35% of the expenses. Expenses that you are reimbursed for do not qualify, so if you get reimbursement from your employer or someone else, you must exclude these cost when figuring the credit. The credit also maxes out at $3,000 for one child, and $6,000 if you have two or more children. The actual percentage rate of the tax credit that you receive is dependent upon income.
Also keep in mind that this is a credit – not just a deduction. Credits actually reduce your tax owed dollar for dollar. Deductions only reduce the income from which the tax is computed. Credits are much more valuable to tax payers.
Chad is a Charlotte CPA who works with small business owners and invidiuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. You can find our more about Chad by visiting his profile here: Chad BordeauxTags: taxes
