Let's face it – summer camp can get pricey. The base tuition, special clothes, a swimsuit and Speedo swim cap can all take a big bite out of your wallet. You don't want your child to miss out on a meaningful summer educational experience, but you also don't want to break the bank. Fortunately, our nation's tax system may be able to offer some additional assistance to you.
Here are the basic stipulations:
- You and your spouse must work full time and not be able to look after your children due to your employment.
- Your child must be 12 or younger for the entire time care was provided.
Flexible Spending Account (FSA)
Many employers offer their workers the opportunities to place funds in a tax-deferred account for childcare-related expenses. You can store up to $5,000 in an FSA, and depending on your federal and state tax rate, you are saving almost 40 percent. There is a catch, however, you will have to plan months in advance how much you will put in the account and if you don't use all of the money, you will lose it.
Dependent care tax credit
When filing your tax return, you can apply for a credit of up to $3,000 for one child or $6,000 for two or more children. The credit is a 20 percent discount for families earning more than $43,000 a year. It goes up to 35 percent for those earning less.
In order to spend funds from an FSA or apply for any tax credits, you will need to save receipts from the camp and ask for its tax identification number. This information will be required once you file a return.