You cannot use a 529 plan to pay for summer camp costs. 529 plan distributions used to pay for summer camp will be considered non-qualified and subject to income tax and a 10% penalty on the earnings portion of the withdrawal. Any state income tax benefits attributable to the distribution may also be subject to recapture.
Summer camp expenses can add up, but there are ways families can bring costs down. For college students, 529 plans can be used to pay for study abroad and other summer programs offered for credit through an eligible college or university.
Average cost of summer camp
According to the American Camp Association (ACA), more than 14 million children and adults attend day camps, overnight camps and specialty camps each year in the U.S. On average, parents pay around $314 per week per child for day camp, $768 per week for sleepaway camp and between $500 and $1,000 per week for science, sports, technology and other specialty camps. Additional costs may include sunscreen, insect repellent, swim suits and other camping gear.
Although camp fees are not considered a qualified 529 plan expense, attending camp may help children academically. A study by the ACA shows camp is a “unique learning experience that appears to promote skills transferable to 21st century school and work contexts.” Almost half of camps report a relationship with schools or school criteria, with some summer camps partnering with schools as a way to help children retain leaning during their summer break.
How to save money on summer camp
According to the ACA, 93% of accredited camps offer need- or merit-based scholarships. Some camps also offer discounts for referrals, siblings, early registration, upfront payments and parent volunteering.
There are also many affordable, and even free, summer camp options for kids. Parents should explore programs through their local YMCA, Parks and Recreation Departments and Boy Scout and Girl Scouts. Vacation Bible Schools offered through churches are another low-cost summer camp option and are typically open to all families, regardless of religious affiliation.
Some colleges may offer free or low-cost summer camps as a way to give back to the community, especially for students whose parents do not have college degrees.
Working parents may qualify for a non-refundable tax credit for summer day camp costs. The Child and Dependent Care Credit offers a tax credit of up to 35% of qualifying expenses on up to $3,000 for one child or dependent under age 13 and up to $6,000 for two or more children or dependents under age 13. The amount of the credit is based on the taxpayer’s income. To qualify, both parents (if filing jointly) must have earned income during the tax year and the child had to attend the summer camp while the parents were working or looking for work. Summer overnight camps do not qualify for the Child and Dependent Care Credit.
Qualifying expenses must be reduced by the amount of any tax-free child or dependent care benefits provided by the taxpayer's employer.
Using a 529 plan for summer activities
Parents can take a tax-free 529 plan distribution to pay for a variety of college expenses, including tuition, fees, books supplies and equipment and some room and board costs, and up to $10,000 per year in K-12 tuition. During the summer months, qualified college expenses include:
- Summer courses at a community college. Taking summer courses at a local community college allows students to save money on tuition and potentially graduate sooner. 529 plan funds can be used at any eligible post-secondary education institution.
- Room and board. Parents can take a tax-free 529 plan distribution to pay for room and board costs if the student is enrolled in college on at least a half-time basis, and is seeking a degree, certificate or other recognized credential. If the student lives off-campus during the summer, qualified room and board expenses cannot exceed the college’s room and board allowance listed in the official cost of attendance.
- Study abroad. 529 plan savings can be used tax-free to pay for summer study abroad programs offered by foreign colleges and universities that are eligible for Title IV federal student aid.
- Gap year programs. Students may be able to use their 529 plan to pay for a gap year program when the program offers college credit from an eligible institution. For example, Outward Bound partners with Western State Colorado University to offer college credit for outdoor education courses.
Travel and transportation costs are not considered qualified expenses.