Ask Kim: Child care flex spending account, tax credit tips
BY KIMBERLY LANKFORD Ask Kim
Sunday, June 24, 2012
6/24/12 at 3:05 AM
Can I use the money in my flexible spending account for dependent care to pay for summer camp? And does the cost of summer camp qualify for the child care tax credit?
If your child is younger than 13 and you're sending him or her to summer day camp while you work or look for work, you can use money from your flexible spending account to cover the cost. The key is that only day camp counts - not overnight camp - and both spouses must be working or looking for work, unless one of the spouses is a full-time student.
The cost of camp can also qualify for the child care tax credit, as long as you meet the same criteria. Other eligible expenses for the FSA and the child care credit include the cost of day care or preschool, before-school or after-school care and a nanny or other baby sitter while you work.
The size of the credit depends on your income and the number of children you have who are under 13. You can count up to $3,000 in child care expenses for one child or up to $6,000 for two or more children.
To claim the credit, you must file Form 2441 with your tax return and include the care provider's employer-identification number or Social Security number. When you pay your camp bills this summer, keep copies of the bills and get the camp's or other provider's employer-ID number so that you'll have the information when you file your taxes next spring.
Be aware that you can't use your child care FSA and apply the child care tax credit for the same expenses. For most people, it's a better deal to use the money from an FSA than to claim the credit.
Original Print Headline: Child care FSA, tax credit tips
Kimberly Lankford is a contributing editor to Kiplinger's Personal Finance magazine. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.