Summer Camp: A Break For Taxes and Parental Sanity

by Hannah Cole on July 25, 2017 You Got This


I’m taking a brief summertime break from my AFC column in order to direct the summer programming at “camp mom.” I will be back in the new season  with more tips and advice on taxes and personal finance for creative economy workers. In the meantime, in honor of all the AFC working artist parents out there, here’s a post on the tax credit that applies to summer camp.

As any parent of young kids knows, juggling work and childcare is hard. And paid childcare is impossibly expensive. Many budget-conscious artist parents who manage to fit their work into school time hours – and avoid babysitters and after school care – simply don’t have that option come summer. Here’s some good news. If you pay to send your child to summer camp so that you can go to work, that camp expense qualifies for the Child and Dependent Care Tax Credit.

So what is the Child and Dependent Care Tax Credit? It’s a credit meant to help working parents with the cost of childcare. Depending on your income and how much you spend on childcare, the Child Tax Care Credit allows you to take between 20 and 35 percent of your childcare expenses up to $3000 for one child or up to $6000 for 2 or more children as a tax credit. It applies to a host of scenarios and is relatively generous.

Because it’s a tax credit (rather than a deduction), it saves you a lot more money. The difference between those can be described thusly:

A tax deduction means that you may subtract the expense from your taxable income. So if you had $50,000 of income, and had a $1000 tax deduction, you would now have a taxable income of $49,000 ($50,000 income – $1000 deduction).  If you were taxed at the 25% rate, that means that your tax due would drop from $12,500 ($50,000 income x 25% tax rate) to $12,250 ($49,000 income x 25% tax rate). You save $250 ($12,500-$12,250). Deductions lower your taxes.

But compare that to a $1000 tax credit. A tax credit lowers your tax due (not just your taxable income) dollar for dollar. If you make the same $50,000 of taxable income, and are taxed at the same 25% rate, then your tax due is $12,500 ($50,000 income x 25% tax rate). A $1000 tax credit reduces your tax due to $11,500 ($12,500 tax due – $1000 tax credit). So the $1000 tax deduction saves you $250, but the $1000 tax credit saves you $1000. That’s a much bigger impact.

There’s one more wrinkle, which is that some tax credits are “refundable.” When you have a fully refundable tax credit (the Earned Income Tax Credit is one of these), if your tax credit reduces your tax liability past zero, the government will actually send you a refund. In other words, if you owe zero dollars in tax, and you get a $1000 tax credit, you will get $1000 back from the IRS in the form of a refund. A non-refundable tax credit can reduce your tax due down to zero, but if it goes past zero, you lose the rest. The Child Tax Care Credit is a partially refundable tax credit (there are endless details in tax, no?). You won’t get the full credit refunded to you if you are owed a refund, but you will get a portion of it. And beginning in 2017, some of the refundable portion of this credit is being phased out.


To take the Child and Dependant Care Tax Credit for your kid’s summer camp expenses, here’s what you need to know:

  • The credit is based on the first $3000 of camp/care expense for your first child, or on your first $6000 for two or more children. If you spend more than that (and if you’re like me and many other working parents, you probably will), you aren’t going to get any additional benefit. This limit is a combined total – so it’s fine to add up multiple camps, or camp plus a school-year afterschool program, babysitter, or regular full- or part-time childcare.
  • It is only for children under age 13, or dependants of any age who can’t care for themselves (such as an infirm/disabled parent under your care)
  • Although I’m writing about this credit in the context of summer camp, you should know that all of these kinds of care qualify for the credit:
    • Day care
    • After school care
    • Babysitters (provided the babysitter isn’t your spouse or your child/stepchild or anyone that you claim as a dependant on your tax return). Note that this is only for babysitting that allows you to go to work – date night doesn’t qualify.
    • In-home assistance for a member of your family unable to care for himself, including a spouse.

These kinds of expense don’t qualify:

  • Tutoring
  • Overnight camp
  • You need to record the name, address, and taxpayer ID number (a social security number for an individual or an employer ID number [EIN] for a business) of the care provider on your tax forms. You will need to ask the camp (or babysitter) for this info.
  • You must be paying for the summer camp (or other care) so that you can work, or look for work. You also qualify for the credit if you are a full-time student for 5 months or more of the tax year. Both spouses must earn income (or be a full time student or looking for work) in order to take the credit.
  • If you’re married, you must file a joint tax return.

The Child and Dependant Care Tax Credit is a comprehensive and helpful tax credit. Take advantage of it. And until I’m back, enjoy your summer.


DISCLAIMER: True tax advice is a two-way conversation, and your accountant needs to hear your full situation to apply the rules correctly in your case. This post is meant for general information only. Please don’t act on this alone.
Bio: Hannah Cole is an artist and Enrolled Agent. She is the founder of Sunlight Tax.

Comments on this entry are closed.

Previous post:

Next post: