DID YOU KKNOW YOUR CHILD CARE TAX CREDIT CAN HELP REDUCE THE COST OF SUMMER CAMP?
INVESTOPEDIA MAKES THES SUGGESTIONS.
Childcare benefits
Paying a daycare center, babysitter, or even summer-camp fees for a child can be a lot cheaper with tax benefits. A child which constitutes a qualified tax dependent who is 13 or younger, as well as a disabled dependent of any age, make parents eligible for a tax credit that can ease their federal income tax obligation.3
- Up to 35% of qualifying child care expenses (capped at $3,000) for a single child.4
- Up to $6,000 for multiple children or dependents.4
This tax credit is intended for both employed and self-employed parents and guardians who earn income regularly. Individuals and couples who have been unemployed for a part of the year can also use it. To qualify, all the following conditions must be met:
- You must have earned income in the past tax year (both your spouse and you if you are filing together).4
- You must be the child’s (or dependent’s) custodial parent or caretaker.4
- You must either work and earn an income, or actively be looking for employment.4
- Your child/dependent must be 13 or younger—unless they have a physical or mental disability that makes them unable to care for themselves.4
- The provider(s) of childcare must not be your dependent or spouse, nor the child’s parent.4
The IRS has a broad spectrum of expenses it considers childcare-related, which are not limited to daycare and babysitters. The full list of potentially eligible expenses includes the following:
- Babysitter or licensed childcare center3
- Maid, housekeeper, or cook who cares for the child/dependent3
- Summer camps, day camps, and even sports camps can qualify if they care for the child/dependent while the parents are working. Overnight camps are not included and do not qualify3
- Before-school and after-school care for children of 13 and younger3
- Nurse, or other care providers for disabled children or dependents3
