For those of us with children, summer camp can be a memorable but expensive activity. Fortunately, there is a tax deduction that can help. IRS allows working parents, students or those looking for work to deduct a portion of these child care expenses on their 1040 return at the end of the year.
While the final amount deductible varies based on income, the maximum you can deduct up is up to 35% of $3,000 of care expenses with one dependent, or up to 35% of $6,000 of care expenses for two or more.
IRS puts a lot of restrictions in place, however. You have to have earned income for the year. You have to be the custodial parent or main caretaker. The caretaker cannot be your spouse, another one of your dependents, or the parent of the child. You must be using the child care or summer camp so you can work or look for work. It cannot be for tutoring, school or overnight camp. You cannot use the “married filing separately” status. Your dependent must be under the age of 13 or disabled. Etc., etc., etc.
As you can see, the rules for who can claim the credit can be complex. The most important takeaway here is that these expenses CAN be deductible, so you remember to save them for tax preparation.
Do you have child care expenses that you think can qualify for the Child and Dependent Care Credit? Clergy Financial Resources reviews these expenses as a part of our 1040 filing process. Visit our website at https://www.clergyfinancial.com/services/clergy-tax-preparation/ today for more information on CFR preparing your 1040 today!
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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