Deducting Summer Activity Expenses

Don't forget to save receipts
  
The kids are out of school and summer is well underway. Make sure you understand the rules regarding the tax deductibility of summer activities and related daycare expenses through the use of the Child and Dependent Care Credit. Collecting those receipts now can save plenty during tax time.
 
What is deductible?
 20 to 35% of qualified un-reimbursed expenses with a maximum amount of $3,000 for one person and $6,000 for two or more qualifying persons.
 
How it works
 To receive the credit you must;

• Have a dependent under the age of 13 or have a spouse or dependent who is physically or mentally unable to care for themselves
• Have earned income (wages) to support the dependent
• The expenses allow for care while you work or look for work
• Have qualified expenses
• Financially support and maintain a home for the dependent
• If married, both you and your spouse must be working or looking for work.

Some summer-time tips
 Daycare expenses are the most common qualifying expense for the Dependent Care Credit.

1. In-home daycare during the summer months also qualifies. Your sitter cannot be a dependent, a spouse or someone under the age of 19.
2. Day camps qualify for the credit.
3. OVERNIGHT camps and summer school/tutoring do NOT qualify
4. Track the mileage of qualified transportation to and from any qualified activity. For instance, if your daycare provider takes the kids on a field trip, the mileage would be part of the qualified activity.
5. Even cooking and housekeeping expenses can count if at least partly for the protection and safety of a qualifying person.
6. Placing your child in a day camp while one of you volunteers at a charity would not work in determining qualified dependent care expenses.

 
Don’t forget to get the provider’s name, address, and Social Security Number/Tax ID number. Also retain and receipts and canceled checks to support your proof of payment. This information will be required when you fill out your tax return.

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
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For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720