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Summertime Child Care Expenses May Qualify For A Tax Credit


July 12, 2010

Did you know that your summer day care expenses may qualify for an income tax credit? Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s tax return. 

Here are five facts to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summertime (and throughout the rest of the year).

  1. The cost of day camp may count as an expense towards the child and dependent care credit.
  2. But, expenses for overnight camps do 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 earned 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. 

Keep in mind that amounts a child earns in a summer job are his or her gross income. This is true even if under local law the child's parents have the right to the earnings and may actually have received them. If the child does not pay the tax due on this income, the parent is liable for the tax. 

Also, remember that there are six tests that must be met for a child to be your Qualifying Child

The six tests deal with:

  1. Relationship,
  2. Age,
  3. Residency,
  4. Support,
  5. Joint return, and
  6. Special test for qualifying child of more than one person. 

The qualifying child tests are explained in detail in IRS Publication 501, Exemption, Standard Deduction and Filing Information.

For more information contact your local PRO-TAX office or check out IRS Publication 503, Child and Dependent Care Expenses