Summer should be a time of fun and relaxation—but for many working parents, it also brings a new challenge: finding affordable, reliable child care. As kids enjoy their break from school, parents often face rising costs from day camps, daycare programs, or in-home care. Fortunately, the IRS offers a valuable way to ease that burden through the Child and Dependent Care Credit. This tax credit can help offset eligible child care expenses, giving families some much-needed financial relief come tax season. From summer day camps to nannies, understanding which options qualify can make a big difference when tax season arrives.
Child Care Tax Credits Explained
The Child and Dependent Care Credit is a tax credit that allows taxpayers to help cover the cost of care for eligible children and other dependents. This credit includes services, like daycare, that allow parents to go to work, look for work, or attend school.
Quick Overview of Child and Dependent Care Credit
- Qualified children are those under the age of 13 that can be claimed as a dependent.1
- If the child turns 13 during the year, then only the part of the year for which they are 12 qualifies for the Child and Dependent Care Credit.2
- Disabled persons aged 13 and over, who are not able to physically or mentally care for themselves and who are still claimed as a dependent, qualify for the Child and Dependent Care Credit.3
- The credit is calculated based on income and the amount that each family or taxpayer will receive varies based on their situation.
- Up to $3,000 of unreimbursed expenses paid during the tax year for one qualifying child can be claimed, or $6,000 for two or more qualifying dependents.4
- If you or your spouse have no-earned income for the year, then you can not take this dedication (unless you or your spouse was enrolled as a full-time student).5
- There may be special rules for taxpayers filing as Married Filing Separately, or for parents that have divorced when trying to claim this credit.
Qualifying Summer Child Care
There are several child care options for the summer months that qualify towards the Child and Dependent Care Credit. Below are few of the most common options for families and some important information to keep in mind if planning to claim the credit.
Summer Camps
Summer camps can be a good option for parents looking for child care this summer. Day camps will often provide kids with the opportunity to try new activities, make new friends, and spend time outdoors. The enrollment price of a summer day camp also qualifies for the Child and Dependent Care Credit, which can help offset the cost come tax season.
However, it is important to know that overnight or sleep away summer camps do not qualify for the Child and Dependent Care Credit. Trying to claim an overnight summer camp as part of the credit can get taxpayers in trouble with the IRS. If planning to use the expenses of summer camp for the credit, stick to daytime only camp options.
Day Care
During the summer months, day cares can provide child care while parents are at work. The expenses of day care also qualify for the Child and Dependent Care Credit, and these businesses are often good at providing families with documentation of expenses and necessary information for claiming the credit.
Babysitters or Nannies
Another common option for summer child care are babysitters and nannies. The wages paid to these in-home care givers can also potentially qualify for the Child and Dependent Care Credit, although there are a few rules to be aware of before hiring a babysitter or nanny.
For starters, the babysitter or nanny can not be a person that is also claimed as a dependent by the same family or individual that is filing for the Child and Dependent Care Credit. Spouses and parents of the children also do not qualify as a care provider that can be claimed on the credit. Lastly, the babysitter or nanny must be at least 19 years of age or older in order to claim the credit.
Information for Claiming the Credit
To claim the Child and Dependent Care Credit, taxpayers must fill out Form 2441, Child and Dependent Care Expenses, and include it when filing that year’s tax return. If using a professional tax preparer or a tax preparation service, they can assist with preparing and filing Form 2441.
It is important to know the information that is needed to complete these forms and keep track of it throughout the year. Form W-10, Dependent Care Provider’s Identification and Certification, is the best way to ask for and keep necessary information on hand related to the Child and Dependent Care Credit.6 In some instances, babysitters or nannies may not wish to provide their social security number. Parents should ask them to complete the rest of the W-10 form, and then can provide a statement of due diligence in attempting to collect the care provider’s information when filing their tax return.7
If using a preschool, day care, or day camp, be sure to collect the following information:
- Name of organization
- Address of organization
- Organization’s Employer Identification Number (EIN)
- Total amount paid for services in tax year – keep receipts of payments
If using a babysitter or nanny, be sure to collect the following information:
- Name of care provider
- Address of care provider
- Care provider’s Social Security Number (SSN)
- Total amount paid to care provider in tax year – keep receipts or notes of payments
*If the care provider is your household employee, you may owe employment taxes.8
*Care providers must be aged 19 years or older by the end of the tax year and they can not be claimed as your dependent.9
*Spouses or parents of qualifying children do not count as a care provider for the credit.10
Other information needed to submit the Child and Dependent Care Credit:
- Qualifying child’s name
- Qualifying child’s Social Security Number (SSN)
Navigating summer child care can be challenging, but the Child and Dependent Care Credit provides valuable support for working families. By keeping accurate records, knowing which expenses qualify, and submitting the right tax forms, parents can take advantage of this credit and ease the financial strain of summer child care. Whether you choose a day camp, daycare, or an in-home caregiver, planning ahead and understanding the rules can help ensure you receive the tax benefits you’re entitled to when it’s time to file.
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
- Internal Revenue Service. Summer Day Camp Expenses May Qualify for a Tax Credit. https://www.irs.gov/pub/irs-utl/OC-SummerDayCareExpensesmayqualityforataxcredit.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
- Internal Revenue Service. (2022, Oct). Form W-10: Dependent Care Provider’s Identification and Certification. https://www.irs.gov/pub/irs-pdf/fw10.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Form 2441: Child and Dependent Care Expenses. https://www.irs.gov/pub/irs-pdf/f2441.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
- Internal Revenue Service. (2024, Oct 30). Instructions for Form 2241. https://www.irs.gov/pub/irs-pdf/i2441.pdf ↩︎
