Along with the lazy, hazy days of summer come some extra expenses, including summer day camp. But, the IRS has some good news for parents: those added expenses may help you qualify for a tax credit.

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.

1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
4. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

1. Do not panic.  Allot, I mean allot of these letters/notices can be dealt with simply and painlessly.
2. There is usually a specific reason for the letter.  Sometimes it is a notice to make a payment on your install agreement.  Notify you of changes in your account or request information.  Each notice/letter offers specific instructions on what you need to do to satisfy the notices’ request.
3. A correction notice is used to make changes to your return, usually a questionnaire is attached.  Review the notice, compare it with your information and reply.
4. If you do not agree with the change/correction the IRS proposes, respond in writing and explain why you disagree.  Include any documentation that clarifies your position.  Mail with the coupon that is attached to their letter to the address it came from.
5. Always mail the response to the IRS notice/letter in the time frame given on that letter.  Timetables are crucial.  Allow at least 30 days for a response.
6. Usually the mail system works well enough that a phone call is not necessary.  However it could be an issue you do not understand, so call the phone number on the upper left hand corner of the notice/letter.
7. Always have a copy of your tax return in front of you when you call the IRS. Remember to write down the date and time of your call and always get the name and ID number of the IRS employee you are talking to.
8. It is important that you keep copies of any correspondence between you and the IRS.

Publication 594 from the IRS has expanded information on this subject.

If you owe tax and don’t file on time, the total late-filing penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to five months. If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 ($135 for returns required to be filed after December 31, 2008) or 100 percent of the tax owed.

You must file your return and pay your tax by the due date to avoid interest and penalty charges. Often the funds necessary to pay your tax can be borrowed at a lower effective rate than the combined IRS interest and penalty rate.

To ensure your payment on a bill for tax is credited properly, be sure to return the tear–off stub on your bill and use our return envelope. Please make your check or money order payable to the United States Treasury. Enter the primary social security number or employer identification number, the tax year and form number and your telephone number on your check or money order.

The penalties for filing and paying late may be abated if you have reasonable cause. If you’re billed for either penalty and feel you have reasonable cause, send your explanation along with the bill to your service center, or call the IRS at 800–829–1040 for assistance. Generally, interest charges may not be abated; they continue to accrue until all assessed tax, penalties, and interest are paid in full. Generally, any reasonable cause exception to the penalty for failure to pay tax cannot be determined until the tax is first paid in full.

There are further possible exceptions to the penalties. One possible exception is if you are a member of the armed forces. Refer to Publication 3, Armed Forces’ Tax Guide, for additional information and qualifications. The second is if you are a citizen or resident alien working abroad. Refer to Publication 54, Tax Guide for U. S. Citizens and Resident Aliens Abroad, for information.

If you believe there is an error on your notice or bill, write to the IRS office that sent it to you within the time frame given. You should provide photocopies of any records that may help correct the error. Also, you may call the number listed on your notice or bill for assistance. If you are correct, we will make the necessary adjustment to your account and send you a corrected notice.

For more information about IRS notices and bills, refer to Publication 594 (PDF), Understanding the Collection Process. More information about penalty and interest charges is contained in Chapter 1, Filing Information, of Publication 17,

FYI: Now the IRS takes that one time tax paid late penalty and assesses interest to it and it keeps on going and growing until the entire debt is paid in full.

IRS page last reviewed or updated: March 25, 2009