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For the Small Business and Self Employed
If you own a small business, home business or are self-employed, there may be many different tax deductions that you are overlooking, but are entitled to take. Why pay more taxes than you absolutely have to? One area that many business owners often overlook is how their children can be utilized within the business. This series will explore several ways that you can save money on taxes, give your children a small income of their own and even allow them to benefit from fun and interesting camps. This article will look at summer camps as a tax deduction.
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More than likely, if you have children, you already send them to camps in the summer. These days, there so many different types of camps that few kids grow bored during the summer. There are swimming camps, basketball camps, cheerleading camps and Christian camps.
But, did you know that you can claim these camps on your taxes as a small business owner? The child and dependent care credit allows you to deduct a percentage of child care costs. Summer camp can count toward those costs under certain conditions.
- Your child must be under thirteen years of age.
- The camp must be a day camp and not an overnight camp.
- The camp must serve as a form of day care, so the parent can work. Many parents do turn to day camps during the summer, when school is out, so they can complete their work.
What does this mean for the parent working from home? It simply means that you need to be working during the hours your child is at day camp. You likely work during these hours anyway, but it might be a good idea to keep careful records during the summer just in case the deduction is ever questioned. The summer camp should give you a bill with their tax identification number for your records. If not, request one. While it isn't likely, the possibility is always there. When it comes to the IRS, record keeping is everything.
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How Much Will You Save?
The answer isn't cut and dried. How much you save depends upon how much you make, how much the day camp costs, and your overall tax savings in other areas. As a rule of thumb, you can claim 20 to 35 percent of child care expenses per year for a single child with a cap of claiming $3000.00. Or, if you have more than one child, the cap is $6000.00. Your allowed percentage is based upon your income. If you are able to claim the maximum for two children, you could deduct a nice chunk of money from your tax bill.
Deduct Your Kids' Summer Camps
Tips for little-known tax breaks you might be overlooking. Consult with your accountant or a tax professional to be sure you are meeting your state's tax codes and any recently updated federal codes. These articles will give you a starting point and hopefully save you a bundle in the process.