What Tax Credits are Available for Summer Child Care?

May 20, 2022 | Employing a Nanny, Payroll, Taxes & Labor Laws

Are you hiring a summer nanny to care for your children? Or will you be taking advantage of the many day camp options available during the summertime school break? Whatever options you choose, the good news is that those additional expenses may help you qualify for a tax credit for summer child care.

If you’re on the fence between sending your kids to day camp or having a nanny provide in-home care, many of our families have found that hiring a nanny is a good alternative to summer camps. A summer nanny can still fill the children’s summer with fun by planning tons of fun summer activities, and on those not so lovely rainy summer days, they can come up with some fun indoor activities to keep them happy (not to mention they can help you with some light household duties).

A common perception related to hiring is a nanny is the high expense. In actuality, nanny agencies generally offer temporary services, meaning you don’t have to hire a nanny that will work every single day. In fact, you can hire someone once a month (or less). Agencies have menus of services and are happy to cater to what you need. These services can be anything from a date night, a nanny who comes along for your family vacation, or an overnight nanny.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.

  1. The cost of day camp may count as an expense towards the Child and Dependent Care Credit.
  2. Expenses for overnight camps do not qualify.
  3. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
  4. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
  5. You may use up to $8,000 of the non-reimbursed expenses paid in a year for one qualifying individual, or $16,000 for two or more qualifying individuals to figure the credit.

For more information, check out IRS Publication 503, or visit our payroll partner, GTM Payroll Services, for details on all the tax considerations for hiring a summer nanny.

If you are interested in summer child care, contact us at (518) 348-0400 and let us know how we can help. Our trusted, reliable caregivers are experienced, professional, and thoroughly screened.

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