Tax Hacks for Parents: Save Big on Summer Expenses

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Summer Tax Hacks: How Parents Can Save Big on Summer Camp Expenses

Summer is here, and if you have kids, they’re probably enrolled in summer camp. Did you know that these expenses may be deductible on your taxes? Today, I’ve got a hot tip that might just make your summer a little cooler, especially if you've got kids heading off to summer camp. But even if you don’t have kids, stick around. You might be able to share this with someone who does. Let's dive in.

Summer Day Camps and Tax Savings

Did you know that the cost of summer day camps can actually help save you on your taxes? Yes, you heard that right. If you’re a working parent scrambling to find summer activities for your kids, the IRS has a little something that might just ease your financial burden. It’s called the Child and Dependent Care Credit.

What Qualifies for the Child and Dependent Care Credit?

If you’ve got kids under the age of 13 and you’re sending them off to summer day camp—whether it’s for sports, theater, math, or just some good old-fashioned fun—the expenses can count towards the Child and Dependent Care Credit. The key here is that it has to be a day camp, not an overnight camp. Those sleepaway camps in the woods we see in the movies, unfortunately, don’t qualify for this credit.

Here's an important note: even if you’re not currently working but are using this time to look for a job, you can still deduct these expenses on your taxes. The IRS understands that job-hunting is an important part of getting back to work and has included that in this qualification for the credit.

How Much Can You Save?

The credit can cover up to $3,000 of expenses for one child or $6,000 for two or more kids. Depending on your income, you could get back between 20% to 35% of those expenses. For example, if your income is under $15,000, you can get the maximum 35% credit. If you’re making over $100,000, the credit is 20%.

Let's do some quick math. Say you have one child and you spend $3,000 on day camp. If you’re in the 20% tax bracket, you’re looking at a $600 tax credit. Not too bad, right? And for two kids, if you spend $6,000, that’s a potential $1,200 tax credit. And keep in mind, this is a tax credit, not a tax deduction. Tax credits are always better than tax deductions because they reduce your taxes dollar for dollar.

But remember, the expenses need to be incurred so that you can work or look for work. That’s the whole point of the Child and Dependent Care Credit—helping working parents manage the costs of childcare.

More Than Just Day Camps

Now, for those of you without kids, don’t tune out just yet. This is valuable information that you can share with friends, family, or colleagues who might not know about this credit.

💡Here's another good tip: this credit isn’t just for traditional daycares or camps. Babysitters and other childcare providers can qualify, too, as long as they’re not your spouse or another dependent. The IRS is pretty flexible here as long as you’re paying someone to care for your child so you can work.

Make Summer Affordable

So there you have it. Deducting summer camp expenses on your taxes can be a great way to save some money and make summer a bit more affordable. If you have any questions or want to make sure you’re doing it right, don’t hesitate to reach out to a tax pro like me. And don’t forget to share this information with anyone you know who might benefit from it.

If you found this blog post helpful, please share it with your network. Thanks for reading, and have a fantastic summer!


About The Author

Noel Lorenzana is an Illinois-licensed, Registered Certified Public Accountant with over 20 plus years of experience.

Through his online educational content, YouTube videos, easy-to-understand courses and 1-on-1 consulting, he gives you the tools to become tax savvy for yourself. 

Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.