Friday, June 3, 2011

Save your receipts: Summer day camps may reap tax benefits

Many working parents must arrange for care of their children age 12 or under during the school vacation period.

A popular solution — with favorable tax consequences — is a day camp program. Unlike overnight camps, the cost of day camp may count as an expense toward the Child and Dependent Care Credit.

Here are five facts the Internal Revenue Service wants you to know about a tax credit available for child care expenses:
  1. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the year.
  2. An expense for an overnight camp does not qualify.
  3. If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
  4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
  5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is also available by calling 800-TAX-FORM (800-829-3676).

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