DCAP and overnight camp

[Guest Nini]

We have a participant who is requesting reimbursement for overnight camp expenses. The camp has already provided a breakdown of expenses between "day" and "night" expenses, and the amount reimbursable is less than 1/2 the amount of the total expense.

The participant has now been told by her accountant that none of the expense is reimbursable under a DCAP. In the past, I believe we have reimbursed if the participant was able to provide a breakdown of the expenses.

Any thoughts/guidance is appreciated.

[QDROphile]

No IRS guidance supports breaking down the expenses. In other contexts, the IRS has supported allocation of expenses. I think the consensus is that overnight camp simply is not eligible.

[jpod]

I am confused as to why there can even be a question relating to summer camp in view of the last sentence below. Am I not seeing some nuance?

(2) Employment-related expenses

(A) In general

The term ``employment-related expenses'' means amounts paid

for the following expenses, but only if such expenses are

incurred to enable the taxpayer to be gainfully employed for any

period for which there are 1 or more qualifying individuals with

respect to the taxpayer:

(i) expenses for household services, and

(ii) expenses for the care of a qualifying individual.

Such term shall not include any amount paid for services outside

the taxpayer's household at a camp where the qualifying

individual stays overnight.

[wsp]

Just playing devils advocate here, but wouldn't it be a question of who is providing the care. If the child goes to a daycare facility with the YMCA and those expenses are covered but the YMCA also has an overnight camp that the child attends in lieu of the daycare for a week why wouldn't the portion attributable to normal care during the day be a qualified expense? Note, I'm not saying that JPOD's position is wrong...just musing on if the IRS would allow such an exception. Personally I hope not as that leads to all sorts of "what if's"...

But it just seems odd that the expense is allowable for little Johnny to color, paint, and play at the YMCA's city owned property but it's not ok the exact same thing occurs at the YMCA's country facility. It really can't be so simple as "only the wealthy send their kids to camp so we'll not allow that expense" Can it?

[SLuskin]

Just playing devils advocate here, but wouldn't it be a question of who is providing the care. If the child goes to a daycare facility with the YMCA and those expenses are covered but the YMCA also has an overnight camp that the child attends in lieu of the daycare for a week why wouldn't the portion attributable to normal care during the day be a qualified expense? Note, I'm not saying that JPOD's position is wrong...just musing on if the IRS would allow such an exception. Personally I hope not as that leads to all sorts of "what if's"...

But it just seems odd that the expense is allowable for little Johnny to color, paint, and play at the YMCA's city owned property but it's not ok the exact same thing occurs at the YMCA's country facility. It really can't be so simple as "only the wealthy send their kids to camp so we'll not allow that expense" Can it?

The IRS doesn't permit this at all. It is not employment related. The same idea applies to elder care under Section 129. If your parent is your dependent and lives with you, and needs senior daycare during the day so that you can work, that is an eligible expense. If your parent is your dependent and lives in a nursing home, that is not an eligible expense.

[wsp]

That's the point....and again, I'm merely posing the devils advocate point here. The dependent is going to need the care during the day so that the expense incurred during the day is an employment related expense.

Seems to me that there is now a market to split the care between two different business entities. One provides and bills for only day time services and the other provides and bills for only nighttime services with only one of them being a deductible expense (depending on when the parent/guardian/supporter works). The mere fact that they occupy the same building/space would be irrelevent.

or per our summer camp....The camp is no longer an overnight camp but a day camp. And they just happen to be able to provide transport (hey kids...anyone up for a little walk???) for the children to a facility that is an overnight facility. Does the day camp then become a deductible expense? Does it matter what each entity charges for their services?