Can your child's enrichment activities be deductible? Yes, in some cases you may be able to write off costs associated with enrolling a child in an enrichment program. However, this isn't actually a "special" deduction.
Deductions for enrichment programs fall under the Credit for Child and Dependent Care. That means that you'll need to meet specific criteria if you want that write-off.
Common enrichment activities like dance classes, cooking classes, sports and martial arts typically are not considered deductible expenses. However, a day camp with a specific theme or focus might be. Take a look at the types of enrichment activities that do qualify for tax write-offs on your 2020 tax return.
How to Make Enrichment Programs Qualify for Deductions
Your child or dependent must be under age 13 for enrichment costs to be deductible. However, there are exceptions for children who are considered permanently disabled.
The other big requirement is that an enrichment program is being used to provide work-related care. This means that the parent is enrolling the child in a program to be able to work or look for work. Typically, this means some type of after-school program. Here's a look at the basics of taking this deduction:
- The child enrolled in the enrichment program must be claimed as the taxpayer's dependent for the filing year.
- The enrolled child must have lived with the taxpayer for more than half of the filing year.
- Families are permitted to claim up to 35 percent of qualifying costs associated with eligible enrichment programs. The cap is up to $3,000 for one child. For multiple children, the cap is $6,000. Costs do not need to be split evenly among dependent children to qualify.
- If a child turns 13 during the tax year, you can only claim expenses paid before their birthday.
An after-school program can only be considered a qualifying expense if both parents are at work during this time. The after-school program would essentially need to be an alternative to a child arriving home to an empty house. What's more, extra costs related to food or entertainment that are charged for the program typically aren't considered deductible.
Camps Can Qualify
Day camp can qualify for a tax write-off if it's used to provide childcare during the day while parents are at work or looking for work. All types of camps specializing in sports, music, arts, nature and more can qualify. However, overnight or long-term camps do not qualify. Any items needed to participate in camp also will not be considered deductible.
Read More: How Much Do You Save With Pretax Day Care?
How to Take a Write-Off for Child Enrichment Activities
In order to claim a write-off, you'll need to make payments directly to the institution providing care and supervision. This can be an after-school program, a local YMCA or day camp. It's also wise to stock away receipts and records regarding dates and times attended.
When filing your taxes for the year, you'll need to be able to provide the physical address and Federal Tax Identification Number of the facility that provided care. You will also need to include Form 2441: Child and Dependent Care Expenses with your return.
Read More: Can Grandparents Deduct Child Care?
What About Church and Nonprofit Enrichment Programs?
The rules for the Child and Dependent Care Expenses credit stand regardless of whether the organization offering care is a nonprofit or for-profit business. However, some enrichment programs could qualify for deductions if you're covering the cost of lessons by making a gift contribution to a nonprofit organization that happens to run programs. An example would be making a gift to a nonprofit dance company that your child works with. In this case, you're taking a deduction for charitable contributions instead of using a child tax credit.
Read More: The IRS and Charitable Tax Deductions
The takeaway is that a regular class or lesson that your child takes for art, music, sports or language generally won't count for a tax write-off. However, an enrichment program that essentially doubles as childcare will. While base costs qualify, any extra costs associated with participation aren't part of the childcare deduction.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.