Only day camp expenses qualify for the credit – the cost of an overnight camp does not qualify.
If you have one qualifying child you can claim the credit on up to $3,000 in expenses. For two or more qualifying children the maximum is $6,000. The amount of expenses eligible for the credit it further limited to earned income of the parent – in the case of two working parents it is the lesser of the two incomes. If one spouse earned $50,000 for the year and the other $2,500, only $2,500 of expenses are eligible for the credit.
If one spouse works and the other is disabled or a full-time student the non-working spouse is “deemed” to earn $250 per month is there is one child or $500 per month is there is more than one. This applies to only one spouse per month. If both spouses are full-time students during the same month, only one is “deemed” to earn the $250 or $500.
In most cases if you are married you must file a joint return to claim the credit. However, the IRS says –
The credit is allowed for a dependent child who is under age 13. You can claim the credit on expenses incurred up to the child’s 13th birthday. If your son turns 13 in November you can still claim the credit on day camp expenses incurred during the summer.
The expenses must be incurred to allow you to work or actively look for work.
Be sure to get the federal Employer Identification Number of the Day Camp if it is a “for-profit” business. You must report this number on the Form 2441 - the IRS will disallow the credit if you do not include an ID number. However, according to the IRS, “You do not have to show the taxpayer identification number if the care provider is one of certain tax-exempt organizations (such as a church or school). In this case, enter ‘Tax-Exempt’ in the space where the tax form calls for the number.”
Day camp expenses also qualify for reimbursement under an employer-sponsored “pre-tax” Dependent Care Benefit “flexible spending account” (FSA). Generally, the tax credit is 20%. If you are in the 22% or higher bracket you will get a greater tax benefit by running your child care expenses through an FSA than if you claim the credit.