Trump will sign his sweeping tax and spending bill on July 4th
President Donald Trump signed his sweeping tax cuts and spending bill on July 4th.
- Children and Dependency Care Credit applies to children under the age of 13 when day care is provided
- The costs associated with sending your child to camp overnight are not eligible for credit for child and addiction care.
Office missions often lead to a return to big bills for summer day camps. So it’s not harmful to take a review course now on how one decent tax cut can help save a family a few dollars.
Many parents may not be aware of that, but you can feel a little more at ease with the high costs of daycare bills and summer camps paid in 2025 when you file your tax return for next year.
What are the care credits for children and addiction?
Children and Addiction Care Credits apply to children under the age of 13 when day care is provided. Complete Form 2441 to calculate your credits and file the form along with your 1040 federal income tax return. Taxpayers can also check IRS Publication 503 for the rules.
“Summer camp fees are only charged if taxpayers need to do their job or find a job,” says Brandon Nischnik, manager of tax practice and ethics at the CPAS Institute of America.
“The main purpose is to raise children, and camping should be a daytime programme,” he said.
The costs associated with sending your child to overnight camp are not qualifying.
Usually, only a small portion of the cost can be recovered. But no one should leave money at the table and ignore the credits if they are entitled to claim it.
“In general, to qualify, parents must work, be full-time students, or use daycare, summer camps, or another program. Providers must have the Social Security number or federal identification number required to apply for a tax credit.”
How do you calculate the tax credit for summer camps?
According to Nishnick, child and dependency care credits are calculated as a percentage of qualification costs ranging from 20% to 35%, depending on the adjusted total income.
If a taxpayer has a qualified child under the age of 13, they can typically charge up to $3,000 and $6,000 for two or more children.
The maximum credit is up to $1,050 for one or some dependent taxpayers. It also amounts to $2,100 for some taxpayers with two or more children or dependents. Or maybe it’s much less.
The amount of tax savings you save depends on your income and expenses. As your income increases, your credit value decreases.
Let’s consider this example. Please take anyone with two children under the age of 13. He says he spends $8,000 a year on care costs. In this case, only $6,000 qualifies for credit costs.
If your adjusted gross income is $45,000, you will receive a $1,200 credit.
Again, the cost should be associated with what you pay for attention when you go to work or when you’re looking for work. We don’t talk about going out to concerts about what to pay for sitters over the weekend.
One such option is for many parents to arrange care and children to participate in day camping programs to go to the office or work.
Keep a detailed record now
“We’re looking forward to seeing you in the future,” said Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting in River Woods, Illinois.
This credit is a non-refundable tax credit for returns in 2025 that can reduce the amount of income tax you owe. However, Luscombe noted that there is no credibility unless taxes are paid. If your annual tax liability is less than your credit amount, no additional refunds will be generated.
What you want to do now is to keep a detailed record of childcare costs, including camping costs and provider information, if it is related to summer camp.
According to some experts, the biggest mistake parents make is their inability to maintain annual child care records, such as payments, address and taxpayer identification numbers.
Nissnik said if parents are planning on charging credit, they should take the time now to make sure their care provider is eligible.
“They cannot be your spouse, parents of children, dependents, or relatives under the age of 19. Care providers must be properly documented with their name, address and taxpayer ID,” Nissnik said.
And don’t expect to get overnight camp credits. “For example, if your parents are working for a third shift or overnight like in the hospital, these costs for overnight camping are not yet eligible,” Nissnik said.
The age of the child at the time care is provided remains an important factor.
“Care must be for children under the age of 13 at the time care is provided,” Nissnik emphasized. “For example, if your child turns 14 on the second day of summer camp, the rest of those costs are not eligible.”
Unfortunately, Staver said parents often overlook or forget to claim their child and dependent credit. Or, some people may seek to charge ineligible fees for their credits.
Of course, some parents were able to work remotely the previous summer since the 2020 Covid-19 pandemic hit.
But we continue to hear about initiatives from more offices. For example, Ford Motor announced in June that automakers would effectively return the majority of their payroll workforce to their offices on September 1st.
More families may be juggling more childcare costs and you may want to hone the available tax credits.
Children and dependent card tax credits work whether you itemize the deduction or claim a standard deduction.
Don’t make mistakes, rules like the ones we have now are complicated.
“Credits are calculated based on income and the percentage of costs that allow qualified people to go to work, find work, or attend school,” according to the Internal Revenue Service.
Currently, Luscombe noted that it has fallen from 35% of taxpayers’ expenses with gross income adjusted to less than $15,000 at AGI. It will not fall below 20%.
The total cost that can be used to calculate your credit cannot exceed $3,000 for one qualified individual.
However, if you have a flexible spending account at work, you cannot charge what you use from that account.
For example, if you save $1,000 on a flexible spending account and use that money for day care or summer camping expenses, you can calculate your dependent care credits based on the cost of up to $2,000 for one child.
The IRS has online tools that help you run some numbers to see if you are eligible to claim credit for your child and addiction care.
Who is eligible? It’s not just about the cost of children.
“Eligible people are generally dependent on those under the age of 13. They are unable to have spouses or self-care and are dependent on those who live with you for more than half of the year,” the IRS said online.
There may be some tax rules changes ahead
In the future, some changes to child and addiction care credits could go ahead at 2026 costs.
On July 1, the US Senate narrowly approved a tax and expenditure law that President Donald Trump calls “one big, beautiful bill.” The package went to a US house where it passed on July 3rd. It was sent to Trump and signed the law.
The Senate settlement bill includes a proposal to raise the maximum fee from 35% of the qualification costs for low-income households to 50%. Luscombe noted that the change is proposed to be effective from 2026.
Garrett Watson, director of policy analysis for the Nonpartisan Tax Foundation, said a wider range of households would see higher credit value for dependent care costs eligible for tax returns under the Senate version.
The 50% credit rate will be phased out for taxpayers with adjusted gross income of over $15,000.
For example, the percentage used to calculate credits could be reduced by $2,000 for every $2,000 with a taxpayer AGI of more than $15,000, rather than 1 percentage point from the new 50% mark, rather than less than 35%.
The percentage is then reduced further, but by 1 percentage point for every $2,000 ($4,000 in joint returns) that is not below 20%, but rather than $2,000 in AGI ($150,000 in joint returns).
Watson noted that the Senate proposal cost around $9.3 billion over a decade by the Joint Tax Committee, a non-partisan government agency.
Please contact Personal Finance Columnist Susan Tom Paul: stompor@freepress.com. Follow himr x @tompor.
