For many working parents, the arrival of spring means it's time to think about summer camp for the kids.
Camps can be a significant but necessary expense for parents who need a place to send their young ones while they're working. The good news is, tax credits can reduce those costs considerably.
If you send a dependent child under 13 to day camp so that you're able to work, you could get at least 27 percent of the cost back through state and federal tax credits, no matter how much money you make.
Those with very low incomes could get up to 42 percent back.
The Child and Dependent Care tax credit is claimed on both federal and South Carolina tax returns. It's meant to help offset the expense of paying people to care for your dependents, children under age 13 or disabled adults who live with you, so that you can work.
For example, say you're married and both you and your spouse work. You send your child to day camp during the summer because you're at work during the day. You could claim up to $3,000 in camp expenses for that child, resulting in a minimum 20 percent federal tax credit and a 7 percent state tax credit.
If you had the maximum $3,000 in qualifying expenses, the resulting tax credits would reduce your tax bills by $810.
The child must be your dependent and under the age of 13 when the care was provided.
Overnight camps don't count. Day camps count even if they are focused on an activity, the IRS says, such as soccer camp or computer camp.
You'll need to provide the name, address and tax identification number of the care provider.
The federal tax credit equals between 20 percent and 35 percent of the qualifying expenses. The percentage is based on income, but there is no maximum income, so everyone can qualify for a 20 percent credit.
South Carolina has a corresponding credit worth an additional 7 percent back for most people.
The credit is meant to help with work-related child-care expenses. That means you (and your spouse if you have one) must have earned income during the year. For a married couple, the lowest income earned by either spouse equals the maximum that can be claimed in qualifying expenses.
The credit is nonrefundable. That means it can be used to reduce what you owe in taxes, all the way down to zero, but if the credit exceeds your tax liability, you won't get a check for the difference.
You can't claim the credit using the basic 1040EZ short form.
The maximum expenses that can be claimed is $3,000 for one child or $6,000 for two or more, but the expense doesn't have to be evenly divided. The maximum amounts include claims for day-care costs and for caring for adult/disabled dependents who lived with you.
To learn more, go to irs.gov and look up Publication 503.
There are rules and regulations to follow, but the bottom line is, if you send your child under the age of 13 to day camp so that you can work, you could recoup a good portion of your expenses.
And that could make you a happy camper.
Reach David Slade at 937-5552 or Twitter @DSladeNews.
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