Employee Tax Benefits
Employee-based Child Care Options
Tax-Free Payments for Child Care
Businesses can set up Dependent Care Assistance Plans, which are flexible spending accounts, that enable employees to set aside up to $5,000 per year in pre-tax salary for child care expenses. Employers and employees do not pay taxes on these wages (e.g., no FICA taxes).
Federal Child and Dependent Care Tax Credit (CDCTC)
When employers send employees their W-2 at tax time, remind them if they have children for whom they pay for child care services, they are able to claim the CDCTC.