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For dependent care benefits, what's the dividing line between an eligible expense and one that's not?

According to IRS publication 503, "The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer" and "expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care."

But "You cannot count any part of the amount you pay the school for your child's education."

Where is the dividing line? What test applies? For example are after school out of home music lessons treated as a "camp", or as "education"? How about expenses for an activity club, which gets the kids out of the house allowing work to be done: say Boy Scouts or Soccer? Does it matter what time of day the activity happens at, relative to the work day?

The only IRS ruling I can find was a 1962 case relating to music lessons prescribed by an orthodontist.

  • I would expect that if the activity occurs during school hours that it can't be claimed because the child is still being cared for by the school. – mkennedy Oct 9 '15 at 21:23
  • Gap care: childcare during school staff days and the like, is definitely in support of work, and allowed. Aftercare: from end of school to end of workday is explicitly OK. Thus "school hours" is definitely not the dividing line. – Bryce Oct 10 '15 at 5:04
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    I...thought it was clear that I meant activities occurring while school is in session (during school hours), but OK. – mkennedy Oct 10 '15 at 12:53
  • I edited a bit of clarification into the orthodontist comment, but, it's not actually relevant to the question because that was about counting the lessons are a medical expense, not as a dependent care expense. – stannius Oct 13 '15 at 20:13
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Eligible expenses are those that cover care which primarily enables both you and your spouse to work.

Ineligible expenses are those that are primarily for the learning or other enrichment of the dependent. Also uncovered are food, clothing, activity fees (e.g. fee for a field trip), and other optional or incidental costs.

I suppose you could attempt to argue that the primary purpose of piano lessons or boy scouts is to enable you to work. But, it probably would be disallowed; at best the onus would be on you to prove it, and it would be an uphill battle. Many such costs are specifically prohibited. Overnight camp is never an eligible expense even if it allows you to work during the day. Tuition for kindergarten and above are never an eligible expense, even in the case of paying for full day kindergarten that enables you to work (though expenses for care before and after school are eligible).

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    You got it. The key word is 'primary'. If the aftercare programs or camps are general, no problem. The aftercare can offer choices that are stimulating. But violin lessons after school are just that. Education. This whole thing is an artifact of tax code that tries to avoid having the well-off put private school onto the taxpayer. In my opinion. – JoeTaxpayer Oct 14 '15 at 17:11

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