Is Summer Childcare Tax Deductible?

For millions of working parents, the summer comes with the added challenge of finding care for their out-of-school children. With summer underway, you probably now have the childcare summer gap covered. There is a good chance this care is eligible for the Child & Dependent Care Credit.

Qualifications for the credit

To take advantage of this tax savings opportunity you must meet the following qualifications:

• You have: one or more dependent children under the age of 13
• You have: earned income (wages, salary, tips, or business income)
• You have: qualified day care expenses
• You are: financially supporting and maintain a home for your dependent child

What you should know

Taxpayers that use daycare to bridge the summer gap could be eligible for a tax credit if they qualify and organize now. To receive the credit:

• The care must be provided so you can work – The care can also qualify if you are looking for work.
• The care does not have to be at a facility – This means day camps, daycare, and nanny care qualify. However, overnight camps or summer school costs do not qualify.
• If married, both spouses need to work – There is some leeway if one spouse is a full-time student or is disabled.
• You need to keep records – You need to have receipts for the care expense and you will have to report the caregiver’s tax information (name, address, and tax ID/Social Security number) to receive the credit.
• The care payment needs to qualify – You may not pay a dependent or your spouse to care for your children. But beyond this, who you pay is flexible.