As summer rolls in with its sunshine and school break freedom, working parents face a familiar challenge: who’s watching the kids?
Whether you’re a high-flying consultant, a home health agency owner, or a busy entrepreneur—your career doesn’t take a vacation just because your kids do. If you’re paying for childcare while you work (or actively look for work), you may be eligible for a tax break that could put serious cash back in your wallet.
Let’s break down how the Child and Dependent Care Credit works—and why this summer could bring you more than just beach days and barbecues.
What Is the Child and Dependent Care Credit?
The Child and Dependent Care Credit is a nonrefundable tax credit that helps offset the costs of caring for dependents—typically children under 13—so that you (and your spouse, if married) can work or seek employment.
The IRS understands that childcare isn’t optional when you’re earning a living. This credit is designed to lighten that financial burden, particularly during the summer months when school is out and the costs of care often spike.
Who Qualifies?
To be eligible, you must meet the following conditions:
- You (and your spouse if married) must have earned income, unless one spouse is a full-time student or incapable of self-care.
- The child must be under 13 years of age (or a disabled dependent/spouse who needs care).
- The care must allow you to work or look for work.
- The caregiver cannot be your spouse, the child’s parent, or another dependent on your tax return.
This applies to both in-home and out-of-home care, with a few caveats.
What Expenses Qualify?
Let’s look at what counts—and what doesn’t.
✅ Qualifies:
- Day camps (including sports, music, computer, or art-themed camps)
- In-home nannies or babysitters (but they are considered your employee—more on that below)
- Nursery schools or daycares
- Before- or after-school programs
❌ Does Not Qualify:
- Overnight camps (no matter how educational)
- Private school tuition
- Care provided by a sibling under age 19 or anyone you claim as a dependent
A Word About In-Home Providers
If you’re paying someone to care for your child in your home, the IRS generally considers this person your household employee. That means you might be responsible for:
- Withholding and paying Social Security and Medicare taxes
- Issuing a W-2
- Filing Schedule H (Household Employment Taxes) with your personal tax return
It’s not a dealbreaker, but it’s important to understand your employer obligations. Not handling this properly can get messy—and expensive.
Tip: Speak with a tax advisor (like us at JS Morlu) before hiring a nanny, especially if you’re planning to claim the credit. We’ll help you stay compliant and minimize your tax risk.
How Much Is the Credit Worth?
The credit is worth up to 35% of $3,000 in eligible expenses for one qualifying person, or $6,000 for two or more, depending on your income.
In real terms:
- If you spend $3,000 on summer day camp and qualify for the full 35%, you could get a $1,050 credit.
- Spend $6,000 on two kids? That could mean a $2,100 credit.
That’s not pocket change. It’s enough to help offset vacation costs, school supplies, or even stash a bit into savings.
Watch: How to Save with the Childcare Credit This Summer
“Got two minutes? This quick video breaks down the summer childcare credit and who qualifies. Don’t miss out—parents are leaving money on the table every year.”
How to Claim the Credit
You’ll need to file Form 2441 with your federal tax return and provide:
- The provider’s name, address, and Tax ID
- Total amount paid
- Details of your qualifying dependent(s)
If your childcare provider is unwilling or unable to give their Tax ID (or refuses a formal agreement), it may disqualify you from the credit.
When Should You Talk to a Tax Pro?
If any of these apply, call us:
- You’re hiring a nanny or in-home caregiver
- You have children attending multiple summer programs
- You’re unsure about dependent eligibility
- You want to plan ahead for next summer’s deductions
At JS Morlu, we specialize in proactive tax planning. Whether you’re a high-net-worth individual or a small business owner, our experts help you keep more of what you earn—with full IRS compliance.
Final Thoughts: Summer Can Be Tax-Smart
Summer shouldn’t be all stress and spreadsheets. With a little planning and the right advice, you can turn your childcare expenses into real savings.
So go ahead—book the day camp, hire the sitter, and get back to building your business. We’ll help you take care of the rest.
Contact JS Morlu today to ensure you maximize your tax credits while staying compliant. Let’s make this summer one for the books—and your bank account.
