This is it, the unofficial end of summer is here and kids across the country are back in school. Yes, we all know in South Florida that means more cars and buses on the road, more traffic and more hectic schedules. But back to school and child care in general could result in big savings for parents in the form of subsidies and tax credits.
Did you know that most American families spend approximately $18,000 a year per child for child care expenses? That’s why this week, I’m sharing some of the top tax credits and subsidies available to parents from both the government and private sector. Here are my top picks:
- TAX CREDITS – The IRS offers all parents the Child Tax Credit, the Child and Dependent Care Tax Credit and the Earned Income Tax Credit. The Child Tax Credit offers up to $2,000 per qualifying dependent child 16 or younger at the end of the calendar year. New in 2018 is a $500 nonrefundable credit for qualifying dependents other than children. You can take the credit only if your income is less than $400,000 for married filing jointly or $200,000 for anyone else. With the Child and Dependent Care Credit, parents can itemize up to $3,000 in child care expenses per child, but only up to 2 children and the dependent must be 12 or younger at the time of childcare. Finally, the Earned Income Tax Credit is for low-income earners. Credits range from $519 for no children to $6,431 for three or more children.
- STATE SUBSIDIES – Individual states offer financial assistance for child care but the guidelines depend on where you live. This kind of aid is for families with children under 13 and would include home-based care or day care center. In Florida, only low-income families qualify, so its best to check with your accountant or bookkeeper to see if you qualify.
- EMPLOYER SUBSIDIES – Some workplaces are trying to retain more workers and encourage loyalty by offering benefits to help employees save money. Many companies offer a Flexible Spending Account or FSA, where workers can save money to pay for services such as health care and child care on a pre-tax basis. These Dependent Care Accounts let you set aside $5,000 in pre-tax dollars to pay for child care expenses. Other companies offer on site child care and may even help pay for a portion of it. Check in with your human resources department to see what’s available. If you’re a small business owner, check with your accountant or bookkeeper to see what the tax benefits may be available to your business for offering these kinds of employer subsidies.
The start of a new school year brings with it a lot of extra responsibilities, both physically and financially. Now’s the time to do your homework on ways to save when it comes to back to school or child care needs.
If you need help or have any questions, please reach out to me or anyone on the Brigade Bookkeeping team. As a small business owner and a mom, I know the monetary pressures that come with both. But I also know what’s most important in life is always family, friends and the passion for what you love.