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by: RichardChapo
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We are from the government and we are here to help. Most of us would scream in fear and run the other way like Homer Simpson. Alas, the IRS is saying such words and they are actually true regarding a tax credit you can claim.

Tax credits are an area of the tax code that many people do not really understand. Everybody loves to talk about tax deductions, but I mock your lowly tax deduction. How can I do this? Because tax credits are more powerful.

Why is the tax credit so powerful? The answer is simple. A tax credit is a dollar for dollar reduction from the actual amount of tax you owe the IRS. You deduct it from the final tax amount you would normally write a check for to the IRS.

So, what does all this have to do with sending your kids to summer camp? Many working parents must arrange for care of their children during the school vacation period. The answer is usually some form of summer camp. If the kids are under 13, I have good news.

The child and dependent care tax credit is the magic piece of code we are looking at. You can claim part of the cost of summer day camp as it if your child is under 13 and the camp is not of the overnight variety.

The credit is generally 20 to 35 percent of expenses. The amount is capped at $3000 in expenses for one child and up to $6000 for two or more. So, you could effectively claim a credit of $600 for one child with a 20 percent designation.

Income is also a factor in figuring the credit as you might expect. The 35 percent rate applies if your income is under $15,000. The 20 percent rate, if your income is over $43,000. The percentage moves down as your income increases.

To determine your exact percentage, you should look at the exact sliding scale the IRS publishes. It can be found in publication 503. You can order this or just pull it off the site the agency maintains.

If you like paying the IRS, completely ignore this article. If you feel Uncle Sam is getting more than his fair share, see if you can claim this tax credit and make sure to look for others as well.

About the Author

To learn more about tax credit issues such as California tax credits written by Richard Chapo at BusinessTaxRecovery.com.

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