Is Summer Camp Tax Deductible?

During the COVID-19 pandemic, parents with children probably faced the toughest brunt. Congress came to the rescue by increasing their child care credit allocations for the year 2021. The maximum claimable tax credit was $3,600 per child (5 years or younger), $3,000 for ages 6 to 17. The difference was close to $1,000 in additional tax credit. The essential factor to consider when applying for the child tax credit is whether the parents are making income or not.

This is the first question one would ask. The answer is yes, but under several conditions, which shall be addressed later in the article. During summer, kids are all over the place, having nowhere to go and practically nothing to do. You might not find it safe or productive enough to send them to the beach every day, so your best option is to consider a multifaceted summer camp program.

Summer camp offers tax benefits such as tax credits and tax deductions. You can earn up to $3,600 or $3,000 per child and $6,000 for two children, broken down as follows:

• $3,600 spread over six months is $300 per child aged below 5; then, you can claim the remaining $1,800 during your tax return.
• $3,000 per child aged between 6 and 17, spread among six months, which is $250, then you claim $1,500 on your tax return.

This represents about 35% of the expenses.

The IRS understands that parents need to work to cater to their kids' needs, which is why they provide tax credits and deductions on child care under the Child and Dependent Care Credit. The difference between tax credits and tax deductions is that credits are seen as decreases in your overall tax bill in terms of dollar per dollar. Tax deductions, on the other hand, make a change in your overall taxable income.

So, with this information in mind, how can you make your child's summer camp tax deductible?

How to make summer camp tax deductible?

The child must be a qualifying person.

While there are exceptions to this rule, your child must be below 13 years old. They have to be your child and not a friend's kid. You will not earn a tax credit if you send another person's child to summer camp. If they are disabled, there is no age limit.

For dependents whose parents are divorced, the custodial parent, the one with whom the dependent spends most nights in a year, is eligible to claim the credit.

Overnight or sleepaway camps do not qualify.

Day camps are the only ones considered for tax credits. Overnight camps are not eligible as they do not affect work. The IRS assumes that work is done during the daytime, making all day camps eligible as dependent care, regardless of any factor. It is assumed that the role of the camp where you take your child is to provide you with freedom and time to work or look for work. You cannot claim tax deductibles for overnight camps.

It does not just stop at day camps. It goes further to housekeepers, nannies, babysitters, and cooks who may provide child care. These expenses can be used to claim tax deductions.

Have all requisite forms

You will need Form 2441: Child and Dependent Care Expenses to claim your summer camp deductibles. It should be attached to Form 1040, 1040-SR, or 1040-NR.

An important point to note: the credit one earns is refundable.

You and your spouse must be working or looking for work.

The IRS requires that if you file jointly with your spouse, you must have earned an income during the last year. If not, you must be looking for employment. Also, you can either file as the head of the household, single, widow, widower, or filing jointly as a married couple.

The exception to this rule is when the spouse is disabled. The IRS completely waivers this rule in this case.

The authenticity of the summer camp

Here, two factors matter:

• The summer camp should not be owned by your spouse or your dependent's child.
• You must show proof of payment to an actual summer camp. When filing your tax returns, you must provide a tax ID number and the summer camp's address.

Transportation fees

Driving your child to their summer camp can be expensive, especially if the location is too remote. Some parents drive across states to take their kids to the best summer camps that cater to their personal needs. Since every expense going to a child's daycare is covered in the Child and Dependent Care Credit, transportation costs also count, right? Well, not exactly. The only way they could qualify for a tax credit is if the camp is the one picking and dropping your kid, and that amount is categorically stated in the fees charged. Then, and only then, can transportation costs be included under this credit.

Do virtual camps count?

In the digital age, most kids thrive behind a screen. So instead of driving them miles to summer camp in the forest, you could enroll them in a virtual camp. However, it is difficult to ascertain whether virtual camps will qualify for a tax credit. This is because it may not fully provide child care. You will still be required to be there, at their beck and call. Ultimately, you may find that as a parent, you do more work than the hosts of the virtual camp.

Who is ineligible for summer camp tax deductions?

• Overnight camp claims.
• Unemployed.
• Stay-at-home parents.
• Deposits paid, then canceled.