Send Your Kids to Summer Camp and Save at Tax Time
Summer camps are a win-win situation for you and your children.
The summer is often a time to take family vacations and enjoy a break from the school year routine. But when the excitement of summer break wears off, both parents and kids can find themselves looking for things to do with all of that free time. Summer camps can keep kids from getting bored, help with child care and allow kids to continue learning even while out of school.
If your first thought about summer camps is the price tag, don’t be discouraged because there is a way to reduce the cost. According to the IRS website, working parents can save just over $2,000 on taxes by enrolling their kids who are under 13 in summer camp, thanks to the Child and Dependent Care Credit. The tax credit provides up to 35 percent of $3,000 per child in child care and camp costs, with a two child maximum. This translates to a credit of as much as $1,050 per child, depending on your income range.
Additionally, both spouses must have earned income that is positive for the year in order to benefit from the credit. If there is a stay-at-home spouse to care for the kids, the credit will not apply. Unfortunately, overnight camps do not qualify for the credit, since they are not considered day care. If you’re wondering if the credit applies to athletic camps or day care programs, it certainly does.
To ensure that you do receive your tax credit at filing time, the payment for summer camp must be paid to an institution or person, and the address plus federal tax identification number must be included on your tax return. Another way to save on summer camp expenses may be to take advantage of your employer’s Dependent Care Flexible Spending Account. If offered at your company, you may deposit up to $5,000 per year in the account and this is tax-free money.
The American Camp Association says the average cost of day camp is over $300 per week. Taking advantage of this tax credit can make summer camp much more appealing by significantly reducing the cost. If you don’t know where to begin your search for available summer camps in your area, try searching online for museums, universities and colleges, the zoo, youth centers or even fitness facilities.
There are also additional tax strategies you and your family may benefit from, including car mileage for volunteer positions and part-time job search expenses. For more information and to ask questions regarding your tax strategies, contact the team at Bayntree Wealth Advisors at email@example.com or 888-255-3200.
Bayntree Wealth Advisors, located in Phoenix and Scottsdale, Arizona, provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of your financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.
Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.