Written by: Madeline Brinker, Staff Accountant
Many parents enroll their children in day camps or pay for daycare while school is out for the summer. If you are a working parent, be sure that you are not missing out on the Child and Dependent Care Credit that may be available to you.
A Federal tax credit is available to families who enroll their children under age 13 in day camps or other childcare programs during the summer and throughout the year. In order for the childcare expenses to qualify, there is a set of criteria that must be met:
- You and your spouse if you are married, must work or be looking for work. (The exception to this rule is met if you are a full-time student)
- If you are married, you must file your return jointly to qualify for the credit.
- Overnight camps, summer school tutoring, and care provided by your child under age 19 or someone else you claim as a dependent on your tax return do not qualify as dependent care expenses for purposes of the credit.
Childcare expenses used to calculate the credit are limited to $3,000 for one qualifying child or $6,000 for two or more qualifying children. The credit you receive is calculated as 20-35% of the allowable expenses. Where you fall in the 20-35% range is determined by your income level. If you receive dependent care benefits through your employer, the amount of expenses eligible for the credit are reduced by the benefits received.
If you believe that you qualify for the Child and Dependent Care Credit, be sure to keep all of your records and receipts so that you have them available when you file your 2016 tax return next year. If you have any further questions about this topic or any other tax planning questions, feel free to reach out to one of our tax professionals at any time.