Get a Tax Break on Camps, Childcare

Benjamin and Nathan Gordon can't wait for school to finish so they can spend three weeks at Camp Riverlea swimming, kayaking and puncturing water-filled targets during archery practice.

Camp Riverlea, located just north of Durham, is fast becoming an annual tradition for Ben, 9, and his 6-year-old brother, Nathan. And it's only one of many day camps they attend when Easley Elementary School is not in session. 

"We love the year-round school schedule, but as a two-career family, we are constantly planning for camps and after-school care," said their mother, Deirdre Gordon, associate director of athletics development at Duke. 

Paying for up to 12 weeks a year of full-time childcare, along with after-school care, isn't cheap. But Gordon takes some of the sting out of the cost by paying fees with money she shelters from taxes through Duke's Dependent Care Reimbursement Account.

The Dependent Care Reimbursement Account can be used to pay for daycare, before- and after-school programs, summer day camps and other childcare expenses for children under age 13 if the care provided is necessary to allow an employee to work. 

Duke has offered the Dependent Care Reimbursement Account to employees since 1989. Through this program, employees choose an annual amount to contribute to the account each year, and the money is deducted in equal amounts each month from their paycheck. Once families incur a childcare expense, they can make a claim for reimbursement from the account.

Saundra Daniels, plan manager for benefits at Duke, encourages all faculty and staff with children under age 13 to learn about the program. Money in the account not used by the end of the year is forfeited, but employees can avoid this by budgeting carefully, she said. 

"Dependent care expenses are often quite predictable," Daniels said. "This benefit is a great way to save a bit of money on those known expenses."

Gordon and her husband, Brett, contribute the maximum of $5,000 into their dependent care reimbursement account each year. Although they have never precisely calculated the tax savings, they estimate that it reduces their tax bill by approximately $1,500 each year. 

"It takes some effort to track the paperwork," she said. "But the savings are well worth it."

Gordon is one of nearly 1,500 employees at Duke who enrolled in the Dependent Care Reimbursement Account during open enrollment in October 2010. In 2011, these employees are on track to save more than $2 million in taxes because Duke deducts the money from their paychecks before calculating federal, state and Social Security taxes. 

Gordon said using the reimbursement account helps her budget more carefully for childcare expenses. "Reviewing your costs every October during open enrollment helps instill a little discipline," she said. "With the reimbursement account, I know the money is there. It's nice not to have to worry about it."