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Tax Deductions for Summer Expenses

Tax Deductions for Summer Expenses
For busy working parents, summer actually means higher child care expenses. There’s daycare, sports and summer camps, babysitters and more. Fortunately, there are some tax deductions for summer expenses that are available.

While activities to keep your kids busy are usually well worth the expense (right?), they are still an expense. And as summer rolls along, these “extra” expenses can really add up fast.

So what can you do about it?  Get your notebook out, because there are some tax deductions for summer expenses – but only IF you choose the right activities.

Summer Camp Medical Expenses = Tax Deductions… Maybe

Summer day camps and sports camps often involve some medical expenses, which can be included with your other itemized tax deductions. While the cost of an overnight summer camp itself may not be deductible, the related physicals, shots and other medical expenses may be. Most summer camps require updated physicals and shots for their campers which can be itemized at the end of the year.

Unfortunately, unless you have tons of other medical expenses, the AGI hurdle is often too difficult to clear. As an added bonus, the limit on medical expenses just went from 7.5% of your AGI to 10% in 2013.

Tax Deductions for Day Camp

However, if your summer camp of choice is a DAY camp – not an overnight stay – it could qualify as regular child care and may fall under the dependent care credit. The overnight stay is often the difference. The IRS considers overnight stays are considered more of a luxury – a vacation for both you and the kids.

Day camps qualify because they generally involve a work-related child care aspect (see below for other considerations).

So if your daughter is a drama queen, send her to drama camp and receive a tax credit. And for the son who’s a sports fanatic, enroll him in the local baseball camp, get him out of your hair, and you may be able to claw a bit of the expense back at tax time.

Hold On a Second…

Here it’s important to note that any equipment or clothing you buy for the camps is not tax deductible, so don’t go on a spending spree for space camp thinking you can write it all off. The same rules apply to travel expenses; they’re fun, but you don’t get any tax deductions for them.

The Catch(es)

You really didn’t think you’d get away without some “fine print”… did you?

Summer camps and child care expenses only qualify for the Dependent Care Credit if both parents are employed. The point is that you get a tax credit when the expense enables you both to work. If you’re a stay-at-home parent, there’s no ‘work’ related reason to enroll the kids in camp and therefore you don’t get to write it off. Your kids must be 13 or under.

Also, if you get dependent care expenses from your employer, you don’t get a credit too. Just feel thankful that you got the money tax-free.

If you’re considering watching some kiddos yourself for the summer to earn some extra income, be sure to read up on the tax implications of running a home daycare.

What’s It Worth?

You can use up to $3,000 of the expenses you paid in a year for each qualifying child (up to $6,000 total for two or more kids), and you get up to 35% of that back as a credit. Most families will only get a 20% credit due to the income limitations for the Dependent Care Credit (but still, that’s $1,200 back. Not too shabby.)

The bottom line is that summer child care expenses for the kids can lead to some valuable tax advantages if you meet all the qualifications. Your best bet is to keep track of all child care related expenses and receipts for your CPA to review come tax time. You never know what you’ll be able to write off… For more details on tax deductions for summer expenses, see this article from the IRS.

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