How summer day camp can save you taxes
This article organizes the original guidance on how summer day camp can save you taxes into clear sections for easier reading and reference.
Overview
This opening section presents the main context from the original post.
Although the kids might still be in school for a few more weeks, summer day camp is rapidly approaching for many families. Did you know that sending your child to day camp might make you eligible for a tax credit?
The power of tax credits
This section keeps the original guidance focused on the power of tax credits.
Day camp (but not overnight camp) is a qualified expense under the child and dependent care credit, which is worth 20% of qualifying expenses (more if your adjusted gross income is less than $43,000), subject to a cap. For 2016, the maximum expenses allowed for the credit are $3,000 for one qualifying child and $6,000 for two or more.
Remember that tax credits are particularly valuable because they reduce your tax liability dollar-for-dollar—$1 of tax credit saves you $1 of taxes. This differs from deductions, which simply reduce the amount of income subject to tax.
For example, if you are in the 28% tax bracket, $1 of deduction saves you only $0.28 of taxes. So it’s important to take maximum advantage of the tax credits available to you.
Rules to keep in mind
This section keeps the original guidance focused on rules to keep in mind.
A qualifying child is generally a dependent under age 13. (There’s no age limit if the dependent child is unable physically or mentally to care for him/herself.) Special rules apply if the child’s parents are divorced or separated or if the parents live apart.
Eligible costs for care must be work-related, which means that the child care is needed so that you can work or, if you’re currently unemployed, look for work. However, if your employer offers a child and dependent care Flexible Spending Account (FSA) that you participate in, you cannot use expenses paid from or reimbursed by the FSA to claim the credit.
Are you eligible?
This section keeps the original guidance focused on are you eligible?.
These are only some of the rules that apply to the child and dependent care credit. We can help you determine whether you’re eligible—you can reach us at 607-272-5550 or at info@swcllp.com.
Related Resources
These resources connect the article topic with related Bowers service pages and approved professional reading.
FAQ
The questions below summarize the main points already covered in the article.
What is the main focus of How summer day camp can save you taxes?
The article focuses on how summer day camp can save you taxes and organizes the original guidance into sections for easier review.
What topics does the article cover first?
The article begins with the power of tax credits and then continues through the remaining points in the original post.
Which additional areas are included?
Additional sections include rules to keep in mind, are you eligible?.
Does the post include action items or reminders?
Yes. The original post includes listed items that have been kept in list format for easier scanning.
Was the original post wording changed?
The revision keeps the author wording and updates the structure so the post is easier to read online.