Tax Credits for Summer Camps and Childcare

Summertime has a special meaning for children: bike rides, swimming, sleeping late, and most importantly, no school for two and a half months. But many parents—whose work schedule is unaffected by the changing seasons—dread the end of the school year, because finding summer childcare during the day becomes a difficult (and expensive) task.

Sound stressful? Don’t worry, there’s good news.

To ease the financial burden of summer expenses, the IRS offers special tax credits for qualifying taxpayers who pay for summer childcare. This means that the money you pay these next couple of months for daycare, summer day camps, and even in-home baby-sitters can help you earn a significant tax credit on next year’s return—up to 35% of what you pay now. This helps offset the cost as you go to work every day (or look for work, if you are unemployed).

Of course, there are certain rules that apply:

  1. The care must be provided for children or dependents under the age of 13 or considered physically or mentally incapable of caring for themselves.
  2. The childcare has to be during the day only—so while a day camp is an eligible expense, overnight camps don’t count.
  3. School tutoring isn’t considered an eligible expense, nor is baby-sitting performed by your spouse or another dependent.
  4. You and your spouse have to have some earned income over the summer, unless one of you is a full-time student, or physically or mentally incapable of work.

To find out if you qualify and how to take advantage of this benefit, consult your local tax professional or read through the IRS’ Publication 503, Child and Dependent Care Expenses.