summerSchool’s out!  Unfortunately, work is in.  Many parents choose to enroll their children in day camp in order to prevent summer from interfering with such things as working.  If this is your situation, you may qualify for a federal tax credit.  Here are 10 things you will want to know if your kids are at day camp for the summer:

1.  Care for Qualifying Persons.  Your expenses must be for the care of one or more qualifying persons.  Your dependent child or children under age 13 generally qualify.

2.  Work-related Expenses.  Your expenses for care must be work-related.  In other words, you must pay for the care so you an work or look for work.  This rule also applies to your spouse if you file a joint return.  Your spouse meets this rule during any month they are a full-time student.  They also meet it if they are physically or mentally incapable of self-care.

3.  Earned Income Required.  You must have earned income.  Earned income includes wages, salaries and tips.  It also includes net earnings from self-employment.  Your spouse must also have earned income if you file jointly.  Your spouse is treated as having earned income for any month that they are a full time student or incapable of self-care.

4.  Joint Return if Married.  Generally, married couples must file a joint return.  You can still take the credit, however, if you are legally separated or living apart from your spouse.

5.  Type of Care.  You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.

6.  Credit Amount.  The credit is worth between 20 and 35 percent of your allowable expenses.  The percentage depends on your income.

7.  Expense Limits.  The total expense that you can use in a year is limited.  The limit is $3,000 for one qualifying person or $6,000 for two or more.

8.  Certain Care Does Not Qualify.  You may not include the cost of certain types of care for the tax credit, including:

  • Overnight camps or summer school tutoring costs.
  • Care provided by your spouse or your child who is underage 19 at the end of the year.
  • Care given by a person you can claim a your dependent.

9.  Keep Records and Receipts.  You will need the name, address and taxpayer ID of the care provider.  You must report this information when you claim on the credit on Form 2441, Child and Dependent Care Expenses.

10.  Dependent Care Benefits.  Special rules apply if you get dependent care benefits from your employer.

We wish you a wonderful, federal tax credit filled summer!