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Tax Benefits for Families

Individuals who pay childcare expenses for their children may be eligible for a federal tax credit of up to 35% percent of the cost of daycare. To qualify for the childcare credit, you must have a dependent child age 12 or younger.

You must also meet each of following criteria:

* Your child or dependent must meet certain qualifications,

* Your daycare provider must meet certain qualifications,

* You must have earned income,

* The care provided must enable you to work or to look for work, and

* You must reduce your eligible daycare expenses by any amounts provided by a dependent care benefits plan through your employer.

Tax Benefits for Employers

The employer-provided childcare tax credit is available to employers who pay for childcare services for their employees. Employers must make payments directly to a childcare provider pursuant to an arrangement or contract between the employer and the childcare provider. Payments made to employees as a reimbursement for childcare expenses cannot be included in the credit. Amounts taken as a credit cannot also be deducted as an expense.

The federal tax credit is equal to 25 percent of childcare expenditures made by the employer. The credit is limited to $150,000.

The employer-provided childcare tax credit essentially creates a dual benefit for companies. The employee benefits by saving money on childcare, while the employer benefits by applying the tax credit for the child as expenses against its tax liability.

The employer may also realize additional, less apparent benefits such as the ability to attract quality employees at lower salaries, an increase in productivity by providing quality childcare to employees, and a decrease in turnover for employees who may not be able to pay for childcare out of pocket.

Please consult with your tax advisor if you would like help in determining if it would be beneficial to you to provide childcare for your employees.

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To learn more about Ava’s Angels Childcare, call us at (713) 952-4453, Monday through Friday, 6:30 AM to 6 PM (CST), or email us.

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Ava’s Angels Childcare

9203 Highway 6 S., Ste. 124-222

Sugar Land, TX 77083


(713) 95-CHILD (952-4453)

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