Which Summer Childcare Expenses Can Be Deducted?
Summer’s over, but we hope you kept your receipts! Summer camps can be expensive. The average nationwide cost hovers around $200 per week. Now that the kids are back in school, your childcare expenses have probably gone down a bit. What, if anything, can be deducted from your 2021 tax bill? Can you write off summer camp fees and other childcare-related expenses?
Read on to learn what you need to know about deducting summer childcare expenses.
Introducing the Child and Dependent Care Tax Credit
If you want to deduct summer camp and childcare expenses from your 2021 tax bill, the Child and Dependent Care tax credit can help defray some of those costs. If you qualify, you’ll be able to deduct up to $6,000, depending on how many children you have and how much you spent on childcare. This particular benefit is offered to help offset the expenses of raising a child. It can reduce your tax bill or extend your credit.
To qualify, you:
- Must have earned an income for the 2021 tax year (including your spouse, if married and filing jointly);
- Must be the parent or main caretaker for the child or dependent;
- Must have used the care services to work or look for employment; and
- Must have a child or children either under 13, or disabled and physically or mentally unable to care for themselves.
Which expenses qualify for the credit?
You’re not limited to summer camps when it comes to this credit. You may also deduct the cost of a babysitter, day camps, nursery schools, daycare centers and other institutions that offer childcare services. You may claim your tax credit for up to 35 percent of expenses of $3,000 for one child or dependent. If you have multiple children, you’re allowed to claim up to $6,000.
Sleepaway camps are one type of summer camp that don’t qualify for this tax credit. That’s because sending your child away from home for a month or longer is not considered a work-related expense. You also cannot claim virtual summer camps for this tax credit. The idea is that this is supposed to offset costs of childcare for working parents. If your child is still spending time at home while you’re working, it doesn’t qualify. However, you could certainly deduct the cost of in-home childcare if you had a babysitter supervising the kids as you work.
How much money can I deduct?
The amount you can claim depends on your income. If you make $15,000 or under, you automatically qualify to deduct the full 35 percent from your taxes. That percentage is lowered one percent for every additional $2,000 of income, until you reach $43,000. For income over $43,000, you may deduct 20 percent.
I need help with my taxes
When you want to get the best deduction possible, working with the accountants at Kedean’s Generation can be a great help. We’ll take care of what you need to write off summer camp fees. Call us today to get started.
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