Let’s Hear It For Camp Winnebucca!
You can claim the cost of your child’s summer camp as a dependent care expense if:
- the camp is essentially providing child care so that you and your spouse can work (or look for work),
- it is a day camp (sleepover camps are considered a luxury), and
- the child is under 13.
You can claim expenses of up to $3,000 for one child or $6,000 for two or more children.
The expense claimed is limited by the lesser of the earned income of the two spouses. For example, if one spouse’s annual income is $5,000, you cannot claim the full $6,000 expense for two children.
The claim is made on line 48 of the 1040. You must include IRS Form 2441: Child and Dependent Care Expenses.
The tax credit received is 20% of the dependent care expense if your Adjusted Gross Income is greater than $43,000. The percentage credit rises if the AGI is lower.
Alternatively, some employers have a dependent care benefit plan which enables you to use pre-tax dollars to pay for summer care. If your tax bracket is higher than 20%, then the pre-tax route is the better bang for the buck. In addition, the dependent care benefit plan allows up to $5,000/year per family, whether it is for one or more children. Also, if you have two (or more) children and your childcare expenses exceed the $5,000 allowed under your employer’s benefit plan, you can claim the remaining $1,000 under the dependent care credit (for a total of the $6,000 allowed expense).
If Uncle Sam doesn’t recognize your marriage, then you might be able to increase your tax savings. For example, if a gay couple has two children, and both parents work, then each parent could claim one child. This enables each parent to file as head-of-household, which is favorable over filing as single. Furthermore, if both employers offer a dependent care benefit plan, then the family could have up to $10,000/year in allowable pre-tax dependent care expenses. That’ll pay for a lot of s’mores.
IRS Publication 503: Child and Dependent Care Expenses
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By day, Helen engineers new materials to make computer chips cheaper, better, and faster. When the son goes down (pun intended), she writes about personal finance at Affine Financial Services.
Thanks for the useful info, as per the usual, Helen.
Helen,
You say that if each parent claims one child both could file as HoH. Are you sure about that? There is only one household in that case so I would think that one could file as HoH and the other as Single with + dependent child. That’s how I filed our taxes the year that my partner claimed our second child. I was HoH and my partner was single with +1 child.
Sorry. I’m back. I went and looked up this on the IRS site:
According to the definition of HoH in the IRS document http://www.irs.gov/pub/irs-pdf/p501.pdf…
The HoH must be:
1. Unmarried on the last day of the year.
2. Pay more than 1/2 the cost of keeping up the home.
3. Have a qualifying person.
So it seems to me that a same-sex couple living together with two children couldn’t possibly both claim HoH because how could both be paying more than 1/2 the cost of maintaining the household?
Hi Debra,
First of all, I need you to know that I’m not a tax lawyer and that this answer is not definitive. If you are interested in pursuing it further, I’d recommend you get a decision letter from the IRS. (You may want an attorney to help draft your inquiry.)
A household is not the physical building, it is the family relationship.
My brother owned a home with another guy. Berkeley, CA is very expensive, and they each had modest incomes. They are both straight. If, hypothetically, they each had a child, I don’t see why they both couldn’t file as HoH. After all, they were each single and supporting a child who lived with them.
Online, I found:
It’s not a tremendous stretch of the imagination to see that this might be applicable to LGBT folks. Personally, I’d want to be upfront that the two “families” share most of the house in common, and whatever else is relevant from your family situation that differs from the above description. But Uncle Sam sees us as unmarried persons, and I say that he can’t have it both ways — if we’re unmarried, then, gosh darn it, we have the rights of unmarried persons.
Dana and I have just one child, so I haven’t dealt with this question, personally. If it could save you enough money, I’d run it by a lawyer, have him/her draft a letter to the IRS requesting a decision. If the ruling is in your favor, you might be able to file amended returns from the last few years.
Best wishes,
Helen.