For most people, child care costs are a large expense in a household budget. As parents struggle with the cost of child care, it is important to research all avenues of financial assistance available to families.
- Wisconsin Shares / W2: You may be eligible to receive financial assistance to pay for child care if your children are under 13 (or 19 with special needs) and you meet financial qualifications. Visit the Wisconsin Shares website to see if you are eligible.
- Sliding Fee: Some providers may use this structure by charging higher-income parents more than lower-income parents.
- Family/Multi-Child Discount: Some child care programs may offer a reduced fee when two or more children are enrolled in the same program.
- Employer Benefits: Talk with your Human Resource Manager to see if they offer any type of child care benefits.
- Resource and Referral Services: Company pays for child care search or other services offered by an R&R. 4-C offers a variety of Employer Services.
- On/Near-site child care: Child care program on-site or near the company. Employees may either receive first priority to enroll their children or receive a discount.
- Reimbursement/Voucher system: Company reimburses an employee for a portion of your child care costs
- Dependent Care Assistance Plan (DCAP): The employer agrees to reduce the employee's income by a certain amount, which is placed in a fund for the employee to use to pay for child care. The employee is not taxed on the amount set aside.
- Purchase of Space / Discount Program: The employer arranges to hold a specified number of spaces in a designated child care program. Those slots are then available to the employees on a first come first serve basis. Additionally, the company can choose to offer a discount if the employee uses this designated child care program.
- Tax Credits: It is always a good idea to read through the rules and restrictions in the IRS's publications or to check with your accountant regarding tax credits available. You must be able to document your income and all claimed child care expenses. You will also need the Social Security number or Individual Taxpayer Identification Number (ITIN) for your provider.
- Earned Income Credit (EIC): The EIC is a benefit for working people who earn low or moderate incomes. Workers who qualify can get back some or all of the income taxes that were taken out of their pay. Even workers whose earnings were too small to have paid taxes can get the EIC.
- Child and Dependent Care Credit: This credit helps families pay for child care so that they may work or look for work. For families that do not owe taxes at the end of the year, this credit can give them back some or all of the federal taxes that were taken out of their paychecks. For families that end up owing taxes, the credit can lower the amount they must pay to the IRS.
- Child Tax Credit: A new credit in 1998 means families are eligible for a credit of up to $400 per child under age 17. The child must be a dependent and your son, daughter, or direct descendant, step or foster child.
For more information about tax credit eligibility, contact the IRS and the WI Department of Revenue.