Summer Camp: Let Uncle Sam Help Foot the Bill

Last Updated May 17, 2010 3:10 PM EDT

Summer is quickly approaching. If you haven't already done so, now's the time to settle the question of what your youngster will do once school ends. My vote is to sign him or her up for camp. Sure, it can be pricey. But Uncle Sam is often willing to help working parents foot the bill.

First, let's discuss how much you'll pay for summer camp. According to the American Camp Association, the average day program costs $100 to $275 a week and ones that cater to overnight campers run $325 to $780 a week.

As you might imagine, some programs are more expensive. Here in New York City, a popular day camp for five-year-olds is $500 a week. My former sleepaway camp in Milford, Pa costs a little more than $1,000 a week. Steep prices for sure.

If you weren't a camper yourself, you might wonder why you should even consider something so pricey. For what it's worth, some of my fondest memories are from camp. I also picked up some skills that I wouldn't have mastered had I sat home watching endless episodes of Little House on the Prairie. Thanks to the handful of programs I attended, I can swim like a fish, tackle a ropes course, steer a canoe and put up a pup tent in less than 10 minutes. While none of these accomplishments helped me get into college, I sure had a great time and my mother didn't have to listen to me whine about being bored all summer.

Please understand that my comments aren't meant to guilt any parent into paying for a camp you can't afford. If, however, you just need a little bit of assistance -- and both you and your spouse are working or looking for employment --  Uncle Sam has two tax breaks worth looking into. The one caveat, however, is that they are only good for day camps.

Here's a quick look at your options:

Flexible Spending Accounts (FSA)

Dependent care flexible spending accounts allow parents to set aside $5,000 in pretax money for qualifying child care expenses. (Some employers have lower caps.) In addition to paying for day care and after school activities, these funds can also be used for day camp, provided your child is younger than 13.

The one problem with this tax break is that if you don't already have an FSA you won't be able to open an account now and use it for camp expenses. Typically, you need to fund an account during your employer's open enrollment season. If, however, your company does offer this perk, remember to sign up for next year.

Child and Dependent Care Credit

This tax break is worth 20% to 35% of summer camp expenses up to $3,000 for one child and $6,000 for two or more kids. While most parents think of this credit as something they can only take advantage of for day care, the IRS considers day camp a qualifying expense provided the camper is younger than 13.

Read this IRS publication for more details.

Still feeling the pinch? Keep in mind that many camps offer a host of discounts. Typical ones to look for include financial incentives for referring friends and sibling deductions.

Are you planning on sending your kids to summer camp this year? If not, how will you entertain them during July and August?

Swimming image by Ezs, courtesy of CC 2.0.

Stacey Bradford is the author of The Wall Street Journal. Financial Guidebook for New Parents.