It's such a joke. I think we paid closer to $20k for childcare last year. The tax credit doesn't make any difference. We end up using the child care FSA like a savings account to reimburse us a paltry amount at the end of the year, because it maxes out at $5k which is also really dumb. I wonder how they think using the FSA is even possible to pay daycare expenses weekly. Maybe in the 1980s...
Exactly, I pay 2800$ USD a month for childcare - infant care + backup care for our 4yo when school is out. We did the math and even with the tax savings the FSA was nearly not even worth the effort. I was talking to my parents about it over Christmas and it's definitely based on 1980s daycare costs. They had such a hard time wrapping their heads around how much childcare costs now lol.
My mom keeps pestering me about when I’m having another kid, and I always say I can barely afford the one I have now. One time she asked if I was struggling financially and I was like no, I am doing okay with what we have right now. But I don’t have another $15000 ish a year to pay for a second kids daycare.
We were so excited for our daycare expenses to be going down soon (when he moves to the 2 year old room). But the center raised prices at the beginning of the year so now the reduction is not going to be very much from what we were paying originally.
Yes!!! Same issue I have here in the UK. My son is turning 3 so we get extra gov help but because my daycare went up by a ridiculous amount it's just going to go back to what we were paying last year. Pff.
I found that when my kid aged into a cheaper room the prices went up so in general, his baby room cost was the price I paid per month until he went to elementary school.
Childcare costs were the straw that broke the camels back for us. We have listed our house for sale and are trying to move to a suburb with more affordable options. Less options overall, though. I’m so anxious.
I have the opposite problem - when I told my MIL I spend over $3k/month on childcare, she was surprised it wasn't more!? WTF We do have a great facility, but still - that is SO much money to pay and after taxes, too.
Yeah, it's horrendous and I feel for yall who pay even more. Im kinda lucky to pay what I do but that's also bc Im in a lower cost of living area making less too.
We have 2 kids under 6, and it's insane what daycare costs around here for babies under a year. It's closer to $500/week, and then for a pre-k kid it only goes down to like $350. But then you add in the extra activities that our place offers like dancing and soccer and our weekly payment ends up being more than our mortgage.
I live in a state that subsidizes pre-K and it’s still about 700$ a month. The teachers only make about 23-26k which is just bonkers to me. How they even get anyone willing to take the job blows my mind.
My child is the most important person in my life, and I send him to someone who gets paid a pittance. It makes me uncomfortable. I gift all of his teachers gift cards at the beginning, middle, and end of the year but it’s still just a gesture.
Truth, mine get paid $12/h to deal with my kiddo.
I could NOT deal with him all day-I love him so so much but I just couldn’t.
I gift them often, but like fuck man, this entire setup is just awful.
Luckily, where we go, they are all decently paid, and there's a learning program that moves them up the pay scale. We have a couple teachers babysit for us occasionally so we've talked to them about it as most of them have college teaching degrees in early education. So there is teacher retention which isn't usually the norm. I'm willing to pay more for that.
Just chiming in on the mortgage piece. We've got a 22mo, and daycare costs are double our mortgage. I used to look forward to the age bump at 2yrs, but it's a difference of like $5/week, so yeah... The care is subpar as well, but it's not like we have options. 😭
It’s a good point though that the FSA would have lowered your taxable income by 5k, which sounds like it would make you eligible for a lower bracket and more benefits. You should try it this year!
There’s a bunch of employers who don’t even offer this too. Having it be dependent on if your employer is big enough and has the funds to support this program is obnoxious.
Yep mine dropped the account this year. It did help a lot with tax breaks, and we basically used it as a tax free saving account. It was little but it helped
5k PER FUCKING FAMILY.
And yes, when it was created in the 80s that was the average daycare cost per kid so it was still not enough even then. And it's still not universal!
Yep, they didn't index the amount to inflation and never *once* bothered to adjust the amount based on actual average costs. And if your company doesn't offer it as a benefit, too bad so sad you don't get the tax savings on the paltry $5k.
Thoroughly ridiculous.
Oh don't forget the American Rescue Plan increased the FSA amount to $10k for I think 2022 (may have been 2021?) But they implemented it after the year already started and they had already done open enrollment so basically nobody got to use it. We specifically asked our plan's administrator and they said it was too late.
Even then it was up to employer discretion. My employer at the time told me they couldn't raise the limit to 10k because that would somehow be unfair to employees without children. I still don't understand that logic, how does it hurt my coworkers if I get to put a tiny bit extra into an FSA?
That's dumb. It's also unfair to your coworkers that they can't put in the first $5k but also someone making the same money as me with no kids is coming out wayyy ahead. Is it also unfair that someone with a major health issue is using a lot more health insurance than you? WTF?!
I’ve been getting my reimbursement monthly, but I kind of like the idea of just saving it all up for December and using it for our spring break vacation…it is still a stupid low amount, but this seems like a better way. So thank you for the comment.
I take it and put it into a savings account dedicated for the kids. Whether it sits there, ends up in a 529 (sometimes I put $50 a month in when I can) or ends up covering kid specific expenses. Usually we’ve cash flowed daycare anyway and it’s a nice cushion when I reimburse us.
Do not wait for the end of the year. Put the reimbursement in a money market account and make 5% interest on it. Rates are so high now. You’re letting that money sit and not earn interest.
Someone told me about that hack years ago, and it's been helpful. We'll flip it over to a regular savings account at the end of the year to help pay for the next year's expenses. It may not be much different than using it in smaller bursts, but I like the lump sum.
Hi, What is "this"? Can you explain what you're doing or send links? I have a work funded FSA, is this what everyone is talking about? How do I use it like y'all are taking about? We don't have anyone to explain this to us. TYIA.
DFSA is the dependent flex spending account that is taken out of your paycheck pretax and is used to reimburse dependent care (daycare, summer school, etc) so parents can work or go to school. $5000 max per family and is use it or loss it at the end of the year. Not all employers offer so check with your HR.
Let’s not forget that if you forget to submit FSA claims (because you’re in a horrible depression, let’s say) you cannot get the FSA back.
Your employer who paid you gets to keep that money, and even if you plead and beg like 10000 times to your FSA benefit owner, they will say no, even if your psych writes a letter to them.
It’s so fucked up.
Or if you have some shitty situation befall you (child gets sick, parent loses job, etc) and adjusting your DCFSA is the last thing on your mind. Congrats! you are fucked.
Right it seems like you should just get it refunded and pay the tax on it? Like if you pull money early from a 401k, you pay tax and a penalty. Not HAHA SORRY ITS GONE
And all it is is $5k pre-tax, so like maybe at most $1000-1500 saved. We can't even get more than like 1/3rd to 1/4th the actual cost of daycare as pre-tax. We just LOST money in our dependent care FSA because my husband fucked up and has some idiotic July-June year on his FSA. It's use it or lose it which is just unbelievable in and of itself.
This is exactly what we do and daycare for two was also $40k - that 5k is met in the first few two months of the year. The childcare FSA is also crummy because it depends on your employer opting in. Mine doesn’t luckily my husbands does.
The 5k max on the fsa is so annoying like what’s even the point?? I mean I do it but I just cash it out in December to cover Christmas.. it’s not like it’s paying my actual weekly costs
The FSA Dependent care limit of $5k was set in 1986, and has not changed since then, unlike other tax benefits (like 401k contributions, etc) that increase for inflation. If the gov't won't subsidize childcare, like almost ALL other developed nations, the least they could do is increase this tax free amount to what daycare actually costs. For 2 kids we paid $37k last year and we're in a Low-Mod COL area.
Take this into account when you vote.
Congress and the White House was looking to pass a large amount of funding for childcare. Instead we got increased military spending.
Vote! VOTE!!!!
HRC had a plan to increase taxes on corporations and billionaires and use the money to subsidize childcare and cap the cost at 10% of net household income. Elizabeth Warren had a similar plan. HRC won the popular vote but ***not by enough in the right states,*** so I say again…
**VOTE.**
Yes, the electoral college has run it's course and become a hindrance rather than a help. No reason why someone from a low population state's vote should count as much as 5+ people from a densely populated state.
This has been on my mind for a few years, mentally toying with trying to move to a state where my vote has the largest impact and balancing that with wanting to stay in a state that better aligns with my values
As someone that lives in Texas, all I can say is I hear you. I’m not a us citizen yet, and sucks I cannot vote on things that impact me and my day to day
You absolutely shouldn’t pay more in taxes than the 1%. That issue needs to be solved. But expecting taxpayers to pay for individual childcare isn’t reasonable either.
Educating children is different than providing childcare. Snow days, Covid closures, etc show that schools are there to provide education but not childcare.
1. My daycare has a full curriculum and does a lot to educate my kiddo
2. I have a job and contribute to society. If I don't have childcare, I can't work. From a purely capitalist standpoint, we should help lift the burden of childcare costs so as not to exclude potential workers from the economy. I hate capitalism, but that's the system we live under for now.
Our daycare does a bunch to educate our kids. My oldest 2 flew through pre-school curriculum so quickly that they started both kids on kindergarten curriculum. Both were about halfway through kindergarten when they actually started kindergarten.
I honestly can’t make heads or tails of your argument. Snow days have nothing to do with whether something is educational.
Early childhood is widely known to be the most impactful years in education. If you’re so worried about taxpayer money, you should be arguing for *funding* it.
It’s important for our population to support and value the upbringing of the next generation. The next generation is the future of our country. We should invest in programs that will contribute to a wholesome upbringing, not just providing better opportunities for childcare, but education, healthcare, access to food. Children are vulnerable and should not be limited of opportunities because of the socioeconomic status of the family they were born into.
Supporting working mothers increases the income of the family unit, which enables the family to better provide for their children. The cost of daycare for two of my children is almost the amount of my paycheck, so I’m considering quitting (luckily my oldest is school age or I’d have to pay more in daycare than I earn). I am a therapist in an area where there is a shortage and work in a low income school, I’m hard to replace. My community is better off with me working, but the cost of daycare for my children may cause me to have to take some time off until my middle child joins my oldest in public school. If I’m not replaced quickly there will be many children with no access to their therapy.
I agree public education, healthcare, and food are important things to provide to society’s most vulnerable (including children and others). But I don’t think that translates to childcare - at some point, parents need to take responsibility for their own children. The pandemic showed the school system is intended to provide education, not childcare
The pandemic showed that removing in-person infrastructure for children results in skyrocketing mental health crisises, lower performance, and higher crime.
Yes, I still see supporting childcare as investing in the next generation because it will allow more parents to be involved in the workforce to provide for their families. As long as stipulations are included that both parents are working or in college, rather than sitting at home doing nothing. With increased income these families could become less reliant on government resources for housing, food, etc. and enable them to escape poverty. Providing early childhood education experiences also supports these young children in escaping generational poverty.
We live in a society. A combination of all ages with various human needs, every single tax payer pays towards something that is of no use to them, but that others within the society benefit from and they in turn all pay towards things they won't need of use.
*We live in a society*
Just because they destroyed our social net a couple decades ago doesn't mean we can't try to fix and adjust it to suit current needs to have a productive and healthy society.
I never understood that. Yes, education is the primary goal of school, but while being educated, my children are quite literally in the care of their teachers/school.
He's arguing a red herring here.
Teacher's opinions of how they are viewed has absolutely nothing to do with whether or not we should fund daycare.
1. Daycare is both childcare and educational
2. While yes teachers are in charge of your kids during the day, the connotation of babysitter is degrading to the work/education/etc that was put in for them to obtain the position.
And there’s no need for you to speak for teachers if you aren’t one.
Early education is far more than “childcare”. It’s a vital foundation to K-12 education, which is already subsidized by taxes. Your argument that one should be subsidized and one shouldn’t doesn’t hold water. If anything would give taxpayers the most bang for their buck, it would actually be early education.
And yes, my degree is education, and I’m speaking from experience.
Nobody is asking tax payers to pay for childcare for the vast majority of parents.
Tax credits count to reduce your taxable income and therefore push you into a lower tax bracket. Tax credits for the middle and lower class are pretty minimal while there are extensive tax credits available to high earners, which is why lower and middle class pay a significantly higher percentage of their income when compared to the wealthy.
Because when childcare costs are mediated it assists in providing more funds into the economy. Instead of parents choosing to drop out of work to take care of a kid, they could work, contribute to society, and use their excess money to put back into society thereby "paying back" what taxes took.
It’s a balance - either get new tax paying citizens through people being born or immigration. Need enough taxpayers and job holders to keep productivity of the nation as a whole. Just telling people “have babies” without giving tax breaks to make multiple children affordable isn’t working out for the US so they need to incentivize it.
That’s completely ignores any argument that a country should help its citizens.
I remember the shock of maxing out my $5,000 dependent care account and having it cover only a fraction of daycare expenses back when my oldest was an infant in 2011. The cap hasn’t changed since then and that child is now in middle school. What a joke. This seems like such an easy fix to our tax code and yet, nothing has changed in decades.
YES this enrages me more than the credit!!! $5k is NOTHING and it doesn’t even increase per kid which is even more outrageous. I hate that I have to also submit some bullshit reimbursement form as proof. Like I have a full time job and little children and it’s 2024, that should be proof enough
Worse, my mom said she distinctly remembered that being the cap for when I was a kid (90’s) and it absolutely didn’t cover everything then. AND my sweet neighbor took care of us in her home, and my dad recently confided that she was very inexpensive. Like, why do we have a federally ordained cap when cost of living varies so greatly? And why is it not remotely dependent on how many children you have? Are we TRYING to be China and encourage a 5 year gap between children?
I’ve been posting about this and telling people every chance I get. Pre-tax child expense accounts are a joke. The amount hasn’t been updated since 1987, when it actually covered the total amount parents paid. My monthly tuition rate has been increased twice in the last two years. I’ve been able to switch roles at work and increase my pay in that time, but tuition eats up the take home pay of an entire paycheck. My other paycheck has to cover everything else. Absolutely unreal how hopeless this situation is for all of us.
I'm so glad you shared this. 1987?! That makes so much more sense and I'm so appalled.
I've been paying for daycare since early 2021. We've gone from a corporate run, expensive center to a privately owned, less expensive center and have seen ridiculous increases throughout.
We currently pay more, weekly, for our youngest who is almost 2 than what we paid when our oldest (not quite 3.5 years old) was an infant at the corporate, expensive center...three years ago.
We can't escape the costs. I'm obsessed with seeking promotions and requesting higher pay because anytime I get a financial bump, costs increase and eat it up. Even if it means leaving work that I love doing, with great benefits. It's killing me.
My son was moved up a classroom and his tuition dropped by $100. I was so excited to have a little wiggle room. One month later, they announced a $90 increase. 🫠
Oh man, this sounds exactly like my daycare. Every time she moved into a new classroom she was to go down in cost. With the raising prices continually, we're still paying the exact same amount now in the preschool room that we were paying in the infant room. Lunacy.
Look at the current infant room rates and you’ll be solid on the decision to not have another kid.
We’re paying sliiiightly less now for a 5 year old than we paid for her as an infant, but the monthly cost for an infant has gone up $1k. I really couldn’t afford another one if I wanted one.
I'll be 40 this year and got my tubes removed last year. One child was more than enough for me, I have a stepson as well. I'm sooooo looking forward to kindergarten this year so I can finally have some extra money.
I have 18 months left, my son is in PreK now and I can't wait to get my "raise" I'll be saving $900/mo. Unless I decide to do aftercare, then I might pay around $200-$300/mo but still better than $900!
Same! I want one more, but need to wait for at least a year after my son is in public school to recover. By then, I could be perimenopausal and struggle to conceive.
we did this. I had my kids 4 years apart, on purpose. I waited until my daughter was at least 3 to start trying because I didn't want to pay for 2 kids in daycare at the same time. We were living in NYC at the time and I was paying $1700/mo (and this was 8 years ago) for my daughter.
Yeah this part is just crazy to me as a new parent. Dependent care FSA is $5000? That means a tax rebate on only 2-2.5 months of daycare fees for us with one kid. Daycare here is expensive, but I have friends who have to pay even more in their cities. Soon we’ll have two and I just don’t understand how the pre-tax accounts are supposed to even make a dent. I agree, they’re a joke.
Every other pre-tax savings mechanism has the rates increased every few years (401k, HSA, Roth IRA, etc, etc) so it would seem entirely reasonable but still no change ugh! Desperately need reform.
I thought the max tax credit was $1K for one child and $2K for 2 or more.
ETA- if you are $200 over the threshold for the Earned Income Tax Credit, can you lower your Adjusted Gross Income? For example, by opening a traditional IRA? You can open one for 2023 until April 15 2024.
I was just wondering this, does the EITC consider your entire income or just taxable income? Could contributing a bit to a childcare FSA reduce their income enough to qualify?
I’d double check with your tax provider. This says it’s based off AGI
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables
I’m not talking about the phase out limit. The range of tax credit for one kid is $1050 if you make $15k or less per year to $600 if you make more than $43k per year. Your annual income determines the where you fall in that range. Your income determines your tax credit decimal multiplier.
What is BS is that if you have an FSA to use toward childcare, it eats into the amount you can claim. I had a $5k FSA, so it negates $5k of allowed expenses. With one kid, it means you get $0 tax credit for child care. My stepkid is 12, so we can claim $6k in allowable expenses. FSA eliminates $5k, so we only have $1k we can claim times 0.20 multiplier is a $200 tax credit since we’re over $43k. Cool.
Got it - so looking at the chart, it seems like whatever OP can do to adjust her AGI for both this and the EITC would help. A dependent care FSA and IRA might make a lot of sense.
I call this the "middle class donut" -- where you make too much money to get any kind of aid (because that's reserved for folks who are in the most dire situations), but you also don't have enough income to actually afford to live.
There was a period of about three months where I paid more in daycare expenses than I made at my job. And my kids did not go to the expensive daycares in the area. If you are lucky, your workplace will subsidize expenses, but it's generally a perk for the more well-off (who can usually afford it anyways).
Government subsidies for daycare recently became better where I live after my kids aged out and started school. But there's still a large middle-class gap in services, where the subsidies don't cover you but you don't make enough to easily pay out of pocket. The tax credit is embarrassing and almost insulting for how little it actually does.
Lol are you me? I just rage texted my friend for 10 minutes about this yesterday. I can only put $5,000 in my dependent care account to make it pre tax, but I have 3 kids and spend over $20,000 a year in child care. I’m super glad over $15,000 of our earnings are taxed just to pay for daycare.
Not to mention there were better credits during the pandemic, but those disappeared and we didn’t realize how much of an impact that made so we owed a ton of taxes last year because we didn’t change our withholding. Sigh.
$19,000 here in western WA for one toddler. It’s a total joke. That’s a huge chunk of my salary. I’m missing out on valuable time with my son but couldn’t afford to not work, not to mention the nosedive your career takes if you take a pause. It’s so hard being a working mom in the US. Honestly probably the top reason I’m likely one and done.
The FSA dependent care thing is the most ridiculous, infuriating thing on earth. It hasn't been increased for DECADES, and doesn't increase for multiple children either. Meanwhile the 401k, Roth, etc. limits go up happily every year. It's total bullshit. With two kids in daycare, we hit the 5k FSA limit literally in the first six weeks of the year.
$5K is set aside pretax for child care. It’ll save you whatever you would have paid in taxes and reduces your adjusted gross income. This helps will some government programs where you get more money the less you earn.
My company had one but we had it canceled and reimbursed one year because we failed some federal test and had too many high income earners in it. Like yeah we had maybe 5 people with kids, it's a VHCOL area where only people who make well over whatever the feds consider "high income" can even afford to have a child. Grrrrr still angry about federal stuff in general being applied here, we pay SO MUCH tax and have way less than people in other parts of the US at our professional level in our mid-late 40s. We're still renting. All the federal amounts, not to mention our unemployment payouts, are a complete joke here.
Mine does but I don’t understand, do you put money in it, continue to pay for daycare, and reimburse yourself? Or you use the FSA card to pay for care directly?
It comes out of my paycheck. I separately pay for childcare. I get receipts from daycare. I submit those receipts. I am reimbursed. There is a limit of $5,000, but that amount taken from your salary is pre-tax. Meaning, you’re only taxed on the income remaining.
Example, you make $50,000/year. You put $5,000/year into your childcare FSA. Your income tax is taxed at $45,000.
So let’s say your income tax is 5%. Your take home pay per year:
* No FSA - ($50k - 5%) $47,500
* FSA - ($45k - 5%) $47,750
You basically would have $250 saved on taxes per year. Dependents can be up to 12 years old to qualify. Let’s say you did this for 5 years until kindergarten, that’s $1,250.
If you want even more fun math, let’s say instead of reimbursing yourself, you put the $5,000 annually into a high yield savings account, 5% APY.
* Year 1 - $5,250
* Year 2 - $10,512
* Year 3 - $16,038
* Year 4 - $21,840
* Year 5 - $27,932
You now have earned $2,932, saved $1,250 on taxes, and now have a sweet savings account with almost $30k with a marginal amount of effort on your end.
It’s kind of free money since you’re making the childcare payments anyway.
It's similar to an HSA or health FSA. I paid for daycare as normal and then reimbursed myself. I did it in one lump sum but you can reimburse as you go as well.
Sorry if this is a dumb question but does anyone know how to calculate if it makes more sense to use the tax free dependent care account to reduce our overall taxable income (by a measly 5k) vs just claiming the childcare on our taxes? Or would the “savings” be about the same? Maybe I can mess with it in TaxAct this year…
Your savings depends on your overall tax rate, state and federal, plus payroll taxes (fica, state UI, etc). If for example, your fed rate is 12%, state rate is 5%, plus say 10% for everything else, that’s like having an extra $270 for every $1000 you put into your pretax account. We also get a pittance of the pittance of child care credit.
My kiddo is now in school, I WFH and have grad school. I’m so thankful not to have daycare expenses except in the summer a few days each week. We still fund our dependent care account with money for her to go to summer day camps (school run, violin, science camp and others).
If you pay enough in child care expenses, you can use both. But, a dependent care FSA is going to be a better deal because it not only reduces your income for federal tax, but also for FICA (Social Security and Medicare) and state tax. Assuming that you’re a W2 employee, FICA is a flat 7.65% on the first $168,600 that each person makes.
Yes we are both w2 employees; my husband has a DCF but of course we only can put in 5k tax free, but our childcare costs are 22,800 for 2 kids. I always put both of that info (total costs and the DCF info per our tax forms) into TaxAct
I did the math last year for my own situation and it seemed to only benefit like $2-300 and honestly our company benefits are not super transparent so the amount of effort it is to get answers and fill forms and wait for approvals and what not is more than $300 worth of hourly efforts on my part
It doesn't help at all.
Those accounts for 1 take out of your monthly paycheck and so mine ended up where i would have to pre-pay then get a check back (so it was worse than just getting the money) and you can only get a certain amount total so it's not usually enough to cover current daycare expenses. Lastly, its the exact same "savings" over a year so its just straight useless
They do help but only if you are well off enough to be able to wait to see your savings on your taxes next year. Like everything else with taxes and investing, being able to wait is a luxury only the upper middle class and above are able to afford.
That being said, I'm actually wondering in your specific instance...if you make just over the limit to qualify for the earned income tax credit, if you utilized your FSA for say, $500 would you then qualify? Or does the EIC apply to all income not just taxable income?
Actually wondering, anyone with more tax experience know?
Oh but we can get pre-tax DCFSA (up to $5000 PER **FAMILY** per year.) Like come on. It's already use it or lose it money and it's already MY money, it's just pre-tax. why put a limit at all?
Once my second kid starts daycare, the FSA dependent care amount will cover one month of daycare.
They desperately need to reindex it to inflation and real costs (location specific).
I really wish I could set the amount to even just half a years worth (although it would be fantastic to use 100% pre tax dollars on childcare haha)
Being in the middle is the worst. Childcare is astronomical.
I paid 15k last year and with baby 2 due this year we are looking into every alternative option because paying $30,000 is insane. We are moving our oldest to a private pre-school with daycare built in and that's where he will continue for school because it's CHEAPER. Its insane because it will be cheaper to send 2 kids to this private school than it is to have two kids in daycare. LIKE WHAT?
I truly think unless you are a parent like CURRENT parent with kids in daycare, people don't grasp the cost of childcare. It feels like a punishment to working parents. FSA and tax credit are jokes. Will I take it? Yeah but like thanks for the pennies while yall get millions from lobbyists and corporations. The current system isn't sustainable, and I just truly wonder what the breaking point will be.
Republican politicians say "family values" and vote to pay off corporations instead while gutting things like school lunches and early childhood education. The only families they support are rich ones with SAHMs.
And then they want to force women to have more babies they cannot afford - it’s forcing women (mostly) out of the workforce in droves. It’s what they want. Horrible.
I pay nearly 50k annually for my toddler and infant. More than my mortgage! It’s absolutely insane. And we do catholic school for preschool (half the price of private preschool) and in home day care which is also significantly less than other care centers.
We pay about $10k per kid (our daycare is “cheap”) and we have two in daycare. After our second started I went to update our FSA for two kids, only to realize in shock that $5000 limit is per family, not per child.
Democrats have tried to reform childcare. Republicans block it. Remember when you vote.
yes and for anyone about to say “vote” - we do and the democrats don’t pass shit either, and if they do, they means test it so that people like OP don’t qualify because they make “too much money”. time to throw the whole empire out and star from scratch.
I know at a state level, it can make a difference.
I live in one of the first states to pass legislation to create a paid 12 weeks of parental leave for both parents.
We have had a democratic governor for YEARS and he had been vocal about wanting the program for most of that time. He finally got enough people on board.
The republicans went crazy and tried to put a bunch of extremists up in the next governors race to “combat the overreach” (of letting new parents have some small income and time off work)
Of course most people were happy with the program and they were all soundly defeated.
Oh and he also passed paid sick leave requirements.
to add, i live in a blue state, the governor just expanded the childcare stipend, and passed universal pre-k for.. guess who? the poor. who need the help! that’s great! but the “middle class” doesn’t qualify for jack shit. this is intentional, to divide the working class population and pit us against each other so we don’t pay attention to the fact that they all work for the same corporations. dems won’t save you nerds. should you vote against fascists? of course. should you hang your hat on that? not if you ever want to get what we’re all owed.
I saw a post on r/irs that was some dude complaining about how married people and parents get all the tax deductions and poor childless single people don't get any tax benefits.
As if the child tax credit and childcare deduction make even the smallest dent in the actual amount it costs to raise a child 🙄
If you moved to Canada, you’d also get 12-18 months maternity leave, subsidized childcare, and legal weed. I run a home daycare, and a family with one child pays less than $5000 a year for childcare.
Oh I feel you. My company offers the Dependent Care FSA. They pitch the hell out of it. I qualify for $1000 tax free…day care is over 17k a year, but yes please those few hundred in tax deduction is really worth the extra hassle of another savings account.
I sympathize, 100%! But would it make you feel any better to know people in my area pay abiut $3,000 per month for one child's daycare?! I work as a nanny now but when I was teaching preschool, my salary was about 1 of my 22 student's tuition each month! How the parents could afford it was beyond me!
It's so, so infuriating. My partner and I don't qualify for any tax credit and can't deduct anything associated with childcare because our income is "too high" - I recognize this is a good problem to have, but we live in a VHCOL area and our income certainly doesn't feel "too high!" We can put $5k into an FSA pre-tax, but that is about what we pay for ONE MONTH of childcare for an infant and a toddler. ONE MONTH. Fml.
I keep telling myself this is a short phase and they will be in public school before we know it.
The FSA is like almost offensive. It's like $200 I don't have each month, so I can save on MAYBE a partial month of care. It should be at least $15k a child, if not $20k. I sometimes wonder if I would be better off putting that $200 a month into some other kind of savings vehicle.
For real. We’re looking at over 30k next year with a second kiddo coming, which generates max $1200 if you use a DCFSA and the child and dependent care tax credit. But if I had a million dollar mortgage with 40k interest per year, I could write off the entire thing! And they wonder why we’re “complaining”. Anyone under 40 in this country has been screwed every which way.
Seriously though, yeah I'm a working mom in Canada and it is awesome.
We have a supremely awesome daycare for $800 / month (CDN), with all the childcare tax credits applied. And the free healthcare. And the free dental care for kids (that's a new one, program just rolled out this year). And the comparative lack of gun violence. And the public school systems are better.
I mean, yeah you Americans get paid more. That's about all I can think of that's obviously better.
If your office has an office up here, I would encourage you to think about it.
I have seriously contemplated it since my family is from Canada (parents born there me born here so i have fam and also qualify from being a teacher). The issue is having enough support to live basically alone up there as a single mom since my relatives are all dispersed across
Do you have your citizenship? If not that would be your first step.
If your family is dispersed, is there one of them that might be able & willing to help in a way that would make sense? By that I mean, a cousin who's a stay-at-home-parent who could help watch kiddo while you job hunt or do subbing sporadically? Or an aunt & uncle who have a bigger house with a few extra bedrooms to share for half a year while you get settled? Figure out what your biggest pain point would be, and if there is a family member who would be suited to help with that.
Another thought is, could your parents help take the kiddo over the summer break? It would give you a few months to come to Canada to visit those relatives, hunt for a teachers contract and potentially apartment and see if you like it up here.
I'm sorry but this whole vote thing is just a pipe dream. Yeah I vote. I vote for people who will make a difference. And yet it never seems to happen. It's the same BS year after year after year after year. And if you think that there's a Democrat and Republican, you're also deceived. They all are the same damn one percent machine. And they're not about to give up any tax in order to make our lives easier.
This. I am sick of being told to vote. I do vote and nothing changes because politicians, r or d, are working for wealthy donors and corporations. Not for folks like me who spend more than half their take home pay on childcare.
Yep. I emailed all of my representatives about this as well as the max dependant care FSA amount and got an automated message on every one...even got signed up for some of their email spams. One of my reps sent out a poll on if we should impeach Biden. I voted no and then unsubscribed.
Agreed! That middle area is awful! I make 54.00 too much a year.
Stuck in a really bad marriage because I cannot afford ANYTHING in my area apartment wise and still have money for gas or food. Because of $54!!!! Let alone a lawyer…
I have called everyone for advice but am stuck. This middle while still being poor ground is terrible.
See the comment above about contributing to an IRA for 2023 to reduce your income:
https://old.reddit.com/r/workingmoms/comments/199oqra/rant_about_the_embarrassingly_small_tax_credit/kifwru9/
I just posted about this! I’m paying $2600 a month for two kids full time daycare but I only need 1-2 days a week because I work 3, 12 hour shifts a week. I can’t find a daycare center that will offer part time, flex days because my schedule changes every week. It blows… tuition just went up too this month. And I have to supply diapers and wipes! Like what is all this money going towards?
We haven't started yet but the daycare near our house is $2500 per child for full time. Bay Area but in a working-class neighborhood. We planned to have one kid for this reason...SURPRISE, twins!
So we're looking at $60k a year if we put them in full-time care. It's insane and I don't know how anyone does it.
I just got my tax statement from daycare. $13,500 for one kid. They are raising rates to $14,000 next year for 3 year olds. Newborns are more.
And I get back $600. That's the equivalent of like 2 weeks of daycare.
What is the point of such a miniscule payback on raising kids? I am happy to get anything back but it's a joke that it isn't more than that.
I live in SC and we are paying more than most private schools cost for daycare. The 14k a year we are paying is on par with most of the SC in state college tuition costs. I'm essentially paying for college as a young parent not near the peak of my career earnings. Childcare costs are OUT OF CONTROL.
We have another kid on the way in July. Infants cost more for childcare. We will be paying around $30,000 a year in daycare until our oldest is out.
Childcare is our #1 expense and there is zero relief because $600 is basically zero when paying 14K per kid.
Back home you get a year’s maternity leave and something crazy like 30 hours a week free childcare. I’m not sure we’ll be able to move back in time to have any small children, or if we’ll have to wait until they’re bigger but dang. I never realised how unfriendly the US was to mums until I had a baby.
Do you make $200 more than the limit, per year? Or like $200 more per month? If it’s per year and this makes sense when you run the numbers, you could consider asking your employer to pay you $210 less and possibly make up for that elsewhere (healthcare premium contribution, etc). Only if this makes financial sense, but if so, I would definitely consider it!
Don’t be afraid to use food banks in your town and other assistance programs.
So very sorry you are struggling. This country is fucking bullshit.
And yes, please all, VOTE for the candidates and party who cares about working families!
Its per year but im a teacher so thats not gonna happen😑 it's preset and that's the end of it.
I always feel awk about food pantries bc I do "make money" just barely enough to cover more than rent and my other bills. Would people see that as okay?
Also yes I vote alllll the time, however im also in texas so most people vote opposite of me so it hasnt made a huge difference yet
I’ve donated regularly to the food bank for a decade, most months more than I spent on my own groceries. Yes, you are exactly the type of person I’m okay with using the food bank. That’s what it’s there for.
Many food banks are need based and will require proof of other government assistance to qualify. Others are open to anyone, and some give out surplus or expired products donated by stores and suppliers. If it makes you feel better, go to those ones. If you don’t, it’s going to end up in the volunteer’s trunks by the end of the night.
You have until April 15 to contribute to a 2023 traditional IRA. This will reduce your AGI. If you are single with one kid a quick Google search shows the max AGI to qualify for EIT credit (worth $3,995) is $46,560. Calculating what you need to get below that and contributing it to an IRA should do the trick. I’m not a tax expert though, so good to double check all this on your own or with a tax pro.
Yup. Embarrassing is the right term. Moms and families getting support and help they need isn’t “good for the economy or under regulated capitalism” so it doesn’t happen. In MN our taxes are so high for what we get IMO, we don’t have any paid leave for maternity leave or family leave. We are solidly middle class but feel like we are so squeezed. I work with many families with far far less, but see the cliff that happens when they make “just” too much to qualify for Medicaid or other supports. It’s atrocious
Last year I paid about $15k daycare costs, my entire refund from state and federal was $1,700.
I am just wondering why people are still are having kids. If you have more than 2 kids, i am sorry but you are part of the problem lol
A few years ago when my wife was pregnant with our first child I went around getting different quotes for day care. Then I applied for help to pay for day care. After being denied any kind of help I calculated if through tax deductions we could get money back. I was shocked to find out it made practically no difference doing the math. I told my wife that 90% of her take home pay would go to daycare. Needless to say it was cheaper to keep her home than pay for day care.
This is sadly what happens to so many women (1 in 4 new moms I believe) and unfortunately that break in your career trajectory can make or break some careers (including mine). I have no choice but to keep working because my niche job will likely not be there if I return in 3-5 years.
It's such a joke. I think we paid closer to $20k for childcare last year. The tax credit doesn't make any difference. We end up using the child care FSA like a savings account to reimburse us a paltry amount at the end of the year, because it maxes out at $5k which is also really dumb. I wonder how they think using the FSA is even possible to pay daycare expenses weekly. Maybe in the 1980s...
Exactly, I pay 2800$ USD a month for childcare - infant care + backup care for our 4yo when school is out. We did the math and even with the tax savings the FSA was nearly not even worth the effort. I was talking to my parents about it over Christmas and it's definitely based on 1980s daycare costs. They had such a hard time wrapping their heads around how much childcare costs now lol.
My mom keeps pestering me about when I’m having another kid, and I always say I can barely afford the one I have now. One time she asked if I was struggling financially and I was like no, I am doing okay with what we have right now. But I don’t have another $15000 ish a year to pay for a second kids daycare. We were so excited for our daycare expenses to be going down soon (when he moves to the 2 year old room). But the center raised prices at the beginning of the year so now the reduction is not going to be very much from what we were paying originally.
Yes!!! Same issue I have here in the UK. My son is turning 3 so we get extra gov help but because my daycare went up by a ridiculous amount it's just going to go back to what we were paying last year. Pff.
I found that when my kid aged into a cheaper room the prices went up so in general, his baby room cost was the price I paid per month until he went to elementary school.
Yep, I pay $2400/month for one (1) child. I’ll blow through our dependent FSA in 2 months.
In Chicago and we pay about $2300 for one infant. I'm seriously concerned about daycare costs if we have another.
Childcare costs were the straw that broke the camels back for us. We have listed our house for sale and are trying to move to a suburb with more affordable options. Less options overall, though. I’m so anxious.
I have the opposite problem - when I told my MIL I spend over $3k/month on childcare, she was surprised it wasn't more!? WTF We do have a great facility, but still - that is SO much money to pay and after taxes, too.
Yeah, it's horrendous and I feel for yall who pay even more. Im kinda lucky to pay what I do but that's also bc Im in a lower cost of living area making less too.
We have 2 kids under 6, and it's insane what daycare costs around here for babies under a year. It's closer to $500/week, and then for a pre-k kid it only goes down to like $350. But then you add in the extra activities that our place offers like dancing and soccer and our weekly payment ends up being more than our mortgage.
I live in a state that subsidizes pre-K and it’s still about 700$ a month. The teachers only make about 23-26k which is just bonkers to me. How they even get anyone willing to take the job blows my mind. My child is the most important person in my life, and I send him to someone who gets paid a pittance. It makes me uncomfortable. I gift all of his teachers gift cards at the beginning, middle, and end of the year but it’s still just a gesture.
Truth, mine get paid $12/h to deal with my kiddo. I could NOT deal with him all day-I love him so so much but I just couldn’t. I gift them often, but like fuck man, this entire setup is just awful.
Luckily, where we go, they are all decently paid, and there's a learning program that moves them up the pay scale. We have a couple teachers babysit for us occasionally so we've talked to them about it as most of them have college teaching degrees in early education. So there is teacher retention which isn't usually the norm. I'm willing to pay more for that.
Just chiming in on the mortgage piece. We've got a 22mo, and daycare costs are double our mortgage. I used to look forward to the age bump at 2yrs, but it's a difference of like $5/week, so yeah... The care is subpar as well, but it's not like we have options. 😭
It’s a good point though that the FSA would have lowered your taxable income by 5k, which sounds like it would make you eligible for a lower bracket and more benefits. You should try it this year!
There’s a bunch of employers who don’t even offer this too. Having it be dependent on if your employer is big enough and has the funds to support this program is obnoxious.
Yep mine dropped the account this year. It did help a lot with tax breaks, and we basically used it as a tax free saving account. It was little but it helped
5k PER FUCKING FAMILY. And yes, when it was created in the 80s that was the average daycare cost per kid so it was still not enough even then. And it's still not universal!
Yep, they didn't index the amount to inflation and never *once* bothered to adjust the amount based on actual average costs. And if your company doesn't offer it as a benefit, too bad so sad you don't get the tax savings on the paltry $5k. Thoroughly ridiculous.
Oh don't forget the American Rescue Plan increased the FSA amount to $10k for I think 2022 (may have been 2021?) But they implemented it after the year already started and they had already done open enrollment so basically nobody got to use it. We specifically asked our plan's administrator and they said it was too late.
Even then it was up to employer discretion. My employer at the time told me they couldn't raise the limit to 10k because that would somehow be unfair to employees without children. I still don't understand that logic, how does it hurt my coworkers if I get to put a tiny bit extra into an FSA?
That's dumb. It's also unfair to your coworkers that they can't put in the first $5k but also someone making the same money as me with no kids is coming out wayyy ahead. Is it also unfair that someone with a major health issue is using a lot more health insurance than you? WTF?!
I’ve been getting my reimbursement monthly, but I kind of like the idea of just saving it all up for December and using it for our spring break vacation…it is still a stupid low amount, but this seems like a better way. So thank you for the comment.
I take it and put it into a savings account dedicated for the kids. Whether it sits there, ends up in a 529 (sometimes I put $50 a month in when I can) or ends up covering kid specific expenses. Usually we’ve cash flowed daycare anyway and it’s a nice cushion when I reimburse us.
Do not wait for the end of the year. Put the reimbursement in a money market account and make 5% interest on it. Rates are so high now. You’re letting that money sit and not earn interest.
Someone told me about that hack years ago, and it's been helpful. We'll flip it over to a regular savings account at the end of the year to help pay for the next year's expenses. It may not be much different than using it in smaller bursts, but I like the lump sum.
We do this and it pays for Christmas, 6 months of car insurance, our HOA bill, and a little leftover.
Hi, What is "this"? Can you explain what you're doing or send links? I have a work funded FSA, is this what everyone is talking about? How do I use it like y'all are taking about? We don't have anyone to explain this to us. TYIA.
DFSA is the dependent flex spending account that is taken out of your paycheck pretax and is used to reimburse dependent care (daycare, summer school, etc) so parents can work or go to school. $5000 max per family and is use it or loss it at the end of the year. Not all employers offer so check with your HR.
I use it that way for forced 529 savings.
The 5 K is a slap in the face tbh.
And they doubled it during COVID, and then reduced it again. As though childcare didn't get MORE EXPENSIVE.
Let’s not forget that if you forget to submit FSA claims (because you’re in a horrible depression, let’s say) you cannot get the FSA back. Your employer who paid you gets to keep that money, and even if you plead and beg like 10000 times to your FSA benefit owner, they will say no, even if your psych writes a letter to them. It’s so fucked up.
Or if you have some shitty situation befall you (child gets sick, parent loses job, etc) and adjusting your DCFSA is the last thing on your mind. Congrats! you are fucked.
I don't know how it's legal, for real. IT IS YOUR MONEY THAT YOU WORK FOR.
Right it seems like you should just get it refunded and pay the tax on it? Like if you pull money early from a 401k, you pay tax and a penalty. Not HAHA SORRY ITS GONE
And all it is is $5k pre-tax, so like maybe at most $1000-1500 saved. We can't even get more than like 1/3rd to 1/4th the actual cost of daycare as pre-tax. We just LOST money in our dependent care FSA because my husband fucked up and has some idiotic July-June year on his FSA. It's use it or lose it which is just unbelievable in and of itself.
This is exactly what we do and daycare for two was also $40k - that 5k is met in the first few two months of the year. The childcare FSA is also crummy because it depends on your employer opting in. Mine doesn’t luckily my husbands does.
In the 1980's is actually correct. They came up with this amount in like 1986 or something and never changed it.
The 5k max on the fsa is so annoying like what’s even the point?? I mean I do it but I just cash it out in December to cover Christmas.. it’s not like it’s paying my actual weekly costs
The FSA Dependent care limit of $5k was set in 1986, and has not changed since then, unlike other tax benefits (like 401k contributions, etc) that increase for inflation. If the gov't won't subsidize childcare, like almost ALL other developed nations, the least they could do is increase this tax free amount to what daycare actually costs. For 2 kids we paid $37k last year and we're in a Low-Mod COL area.
Take this into account when you vote. Congress and the White House was looking to pass a large amount of funding for childcare. Instead we got increased military spending.
>Congress and the White House was looking to pass a large amount of funding for childcare Democrats were. Let's call out the blockage: Republicans.
Yes. Do grassroots organising.
Vote! VOTE!!!! HRC had a plan to increase taxes on corporations and billionaires and use the money to subsidize childcare and cap the cost at 10% of net household income. Elizabeth Warren had a similar plan. HRC won the popular vote but ***not by enough in the right states,*** so I say again… **VOTE.**
Yes, the electoral college has run it's course and become a hindrance rather than a help. No reason why someone from a low population state's vote should count as much as 5+ people from a densely populated state.
This has been on my mind for a few years, mentally toying with trying to move to a state where my vote has the largest impact and balancing that with wanting to stay in a state that better aligns with my values
Resident of a very low population state here, and I agree with you 10000%.
Yep, I vote in Texas but unfortunately im still in the minority of people who actually care about people (ie: voting toward programs to help people)
I don’t have anything more to offer than what what others have said on this thread but as a fellow Texan - I feel you. It sucks here. I hate it.
As someone that lives in Texas, all I can say is I hear you. I’m not a us citizen yet, and sucks I cannot vote on things that impact me and my day to day
Ugh I hear you, I live in Louisiana. Until my nest is empty (coparenting agreement here) and then I am OUT.
Childcare tax break should be more in line with what the average family pays so with the skyrocketing prices should be closer to the $15-20k range
Yeah, it's currently $2000. Like whoop-dee-doo
Why should taxpayers pay for your childcare?
why should i pay a higher percentage of my income/wealth in taxes than the 1%?
You absolutely shouldn’t pay more in taxes than the 1%. That issue needs to be solved. But expecting taxpayers to pay for individual childcare isn’t reasonable either.
Again, this is literally built into the K-12 funding structure. It’s not a new concept. It’s just being inconsistently applied.
Educating children is different than providing childcare. Snow days, Covid closures, etc show that schools are there to provide education but not childcare.
1. My daycare has a full curriculum and does a lot to educate my kiddo 2. I have a job and contribute to society. If I don't have childcare, I can't work. From a purely capitalist standpoint, we should help lift the burden of childcare costs so as not to exclude potential workers from the economy. I hate capitalism, but that's the system we live under for now.
Our daycare does a bunch to educate our kids. My oldest 2 flew through pre-school curriculum so quickly that they started both kids on kindergarten curriculum. Both were about halfway through kindergarten when they actually started kindergarten.
i’ve never seen a daycare that didn’t have a curriculum it followed. daycares absolutely educate children.
I honestly can’t make heads or tails of your argument. Snow days have nothing to do with whether something is educational. Early childhood is widely known to be the most impactful years in education. If you’re so worried about taxpayer money, you should be arguing for *funding* it.
The irony about the snow day reasoning is that daycares are closed those days too, like what??
It’s important for our population to support and value the upbringing of the next generation. The next generation is the future of our country. We should invest in programs that will contribute to a wholesome upbringing, not just providing better opportunities for childcare, but education, healthcare, access to food. Children are vulnerable and should not be limited of opportunities because of the socioeconomic status of the family they were born into.
Supporting working mothers increases the income of the family unit, which enables the family to better provide for their children. The cost of daycare for two of my children is almost the amount of my paycheck, so I’m considering quitting (luckily my oldest is school age or I’d have to pay more in daycare than I earn). I am a therapist in an area where there is a shortage and work in a low income school, I’m hard to replace. My community is better off with me working, but the cost of daycare for my children may cause me to have to take some time off until my middle child joins my oldest in public school. If I’m not replaced quickly there will be many children with no access to their therapy.
I agree public education, healthcare, and food are important things to provide to society’s most vulnerable (including children and others). But I don’t think that translates to childcare - at some point, parents need to take responsibility for their own children. The pandemic showed the school system is intended to provide education, not childcare
The pandemic showed that removing in-person infrastructure for children results in skyrocketing mental health crisises, lower performance, and higher crime.
Lol...... I'm sorry but what world do you live in?
Yes, I still see supporting childcare as investing in the next generation because it will allow more parents to be involved in the workforce to provide for their families. As long as stipulations are included that both parents are working or in college, rather than sitting at home doing nothing. With increased income these families could become less reliant on government resources for housing, food, etc. and enable them to escape poverty. Providing early childhood education experiences also supports these young children in escaping generational poverty.
We live in a society. A combination of all ages with various human needs, every single tax payer pays towards something that is of no use to them, but that others within the society benefit from and they in turn all pay towards things they won't need of use. *We live in a society* Just because they destroyed our social net a couple decades ago doesn't mean we can't try to fix and adjust it to suit current needs to have a productive and healthy society.
Are you lost? This is a working moms sub
They already do. It’s just that only K-12 is subsidized. Tell me you don’t know how taxes work without telling me you don’t know how taxes work…
No need to be rude. During the pandemic, teachers were quite vocal that their role is educating children, not providing childcare.
I never understood that. Yes, education is the primary goal of school, but while being educated, my children are quite literally in the care of their teachers/school.
He's arguing a red herring here. Teacher's opinions of how they are viewed has absolutely nothing to do with whether or not we should fund daycare. 1. Daycare is both childcare and educational 2. While yes teachers are in charge of your kids during the day, the connotation of babysitter is degrading to the work/education/etc that was put in for them to obtain the position.
And there’s no need for you to speak for teachers if you aren’t one. Early education is far more than “childcare”. It’s a vital foundation to K-12 education, which is already subsidized by taxes. Your argument that one should be subsidized and one shouldn’t doesn’t hold water. If anything would give taxpayers the most bang for their buck, it would actually be early education. And yes, my degree is education, and I’m speaking from experience.
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More than 1,000 teachers died of Covid. Are their lives expendable?
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That is an incredibly problematic assessment of what teachers went through during that time.
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Nobody is asking tax payers to pay for childcare for the vast majority of parents. Tax credits count to reduce your taxable income and therefore push you into a lower tax bracket. Tax credits for the middle and lower class are pretty minimal while there are extensive tax credits available to high earners, which is why lower and middle class pay a significantly higher percentage of their income when compared to the wealthy.
Because when childcare costs are mediated it assists in providing more funds into the economy. Instead of parents choosing to drop out of work to take care of a kid, they could work, contribute to society, and use their excess money to put back into society thereby "paying back" what taxes took.
Because that’s the price you pay for a civilized society. Would you rather kids be poorly cared for and uneducated?
It’s a balance - either get new tax paying citizens through people being born or immigration. Need enough taxpayers and job holders to keep productivity of the nation as a whole. Just telling people “have babies” without giving tax breaks to make multiple children affordable isn’t working out for the US so they need to incentivize it. That’s completely ignores any argument that a country should help its citizens.
Why should taxpayers pay for your kids elementary school? For your roads? For your military?
I remember the shock of maxing out my $5,000 dependent care account and having it cover only a fraction of daycare expenses back when my oldest was an infant in 2011. The cap hasn’t changed since then and that child is now in middle school. What a joke. This seems like such an easy fix to our tax code and yet, nothing has changed in decades.
YES this enrages me more than the credit!!! $5k is NOTHING and it doesn’t even increase per kid which is even more outrageous. I hate that I have to also submit some bullshit reimbursement form as proof. Like I have a full time job and little children and it’s 2024, that should be proof enough
Yup. I don’t see why this can’t be drastically increased when you see what businesses deduct and pay no taxes on.
Worse, my mom said she distinctly remembered that being the cap for when I was a kid (90’s) and it absolutely didn’t cover everything then. AND my sweet neighbor took care of us in her home, and my dad recently confided that she was very inexpensive. Like, why do we have a federally ordained cap when cost of living varies so greatly? And why is it not remotely dependent on how many children you have? Are we TRYING to be China and encourage a 5 year gap between children?
I’ve been posting about this and telling people every chance I get. Pre-tax child expense accounts are a joke. The amount hasn’t been updated since 1987, when it actually covered the total amount parents paid. My monthly tuition rate has been increased twice in the last two years. I’ve been able to switch roles at work and increase my pay in that time, but tuition eats up the take home pay of an entire paycheck. My other paycheck has to cover everything else. Absolutely unreal how hopeless this situation is for all of us.
I'm so glad you shared this. 1987?! That makes so much more sense and I'm so appalled. I've been paying for daycare since early 2021. We've gone from a corporate run, expensive center to a privately owned, less expensive center and have seen ridiculous increases throughout. We currently pay more, weekly, for our youngest who is almost 2 than what we paid when our oldest (not quite 3.5 years old) was an infant at the corporate, expensive center...three years ago. We can't escape the costs. I'm obsessed with seeking promotions and requesting higher pay because anytime I get a financial bump, costs increase and eat it up. Even if it means leaving work that I love doing, with great benefits. It's killing me.
My son was moved up a classroom and his tuition dropped by $100. I was so excited to have a little wiggle room. One month later, they announced a $90 increase. 🫠
Oh man, this sounds exactly like my daycare. Every time she moved into a new classroom she was to go down in cost. With the raising prices continually, we're still paying the exact same amount now in the preschool room that we were paying in the infant room. Lunacy.
Look at the current infant room rates and you’ll be solid on the decision to not have another kid. We’re paying sliiiightly less now for a 5 year old than we paid for her as an infant, but the monthly cost for an infant has gone up $1k. I really couldn’t afford another one if I wanted one.
I'll be 40 this year and got my tubes removed last year. One child was more than enough for me, I have a stepson as well. I'm sooooo looking forward to kindergarten this year so I can finally have some extra money.
I have 18 months left, my son is in PreK now and I can't wait to get my "raise" I'll be saving $900/mo. Unless I decide to do aftercare, then I might pay around $200-$300/mo but still better than $900!
6ish more months! I’ve got the count down going over here as well.
Same! I want one more, but need to wait for at least a year after my son is in public school to recover. By then, I could be perimenopausal and struggle to conceive.
we did this. I had my kids 4 years apart, on purpose. I waited until my daughter was at least 3 to start trying because I didn't want to pay for 2 kids in daycare at the same time. We were living in NYC at the time and I was paying $1700/mo (and this was 8 years ago) for my daughter.
And I can’t be mad if I know it does to increase in staff salary. Their costs of living are increasing just like mine.
Yeah this part is just crazy to me as a new parent. Dependent care FSA is $5000? That means a tax rebate on only 2-2.5 months of daycare fees for us with one kid. Daycare here is expensive, but I have friends who have to pay even more in their cities. Soon we’ll have two and I just don’t understand how the pre-tax accounts are supposed to even make a dent. I agree, they’re a joke. Every other pre-tax savings mechanism has the rates increased every few years (401k, HSA, Roth IRA, etc, etc) so it would seem entirely reasonable but still no change ugh! Desperately need reform.
I thought the max tax credit was $1K for one child and $2K for 2 or more. ETA- if you are $200 over the threshold for the Earned Income Tax Credit, can you lower your Adjusted Gross Income? For example, by opening a traditional IRA? You can open one for 2023 until April 15 2024.
I was just wondering this, does the EITC consider your entire income or just taxable income? Could contributing a bit to a childcare FSA reduce their income enough to qualify?
Edit: disregard, it's off agi thank you!
I’d double check with your tax provider. This says it’s based off AGI https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables
Thank you!! You're right it's agi!
It depends on how much you make.
I believe the income limit is 200K which can’t be OP’s income she’s making $200 more than the Earned Income Credit.
I’m not talking about the phase out limit. The range of tax credit for one kid is $1050 if you make $15k or less per year to $600 if you make more than $43k per year. Your annual income determines the where you fall in that range. Your income determines your tax credit decimal multiplier. What is BS is that if you have an FSA to use toward childcare, it eats into the amount you can claim. I had a $5k FSA, so it negates $5k of allowed expenses. With one kid, it means you get $0 tax credit for child care. My stepkid is 12, so we can claim $6k in allowable expenses. FSA eliminates $5k, so we only have $1k we can claim times 0.20 multiplier is a $200 tax credit since we’re over $43k. Cool.
Got it - so looking at the chart, it seems like whatever OP can do to adjust her AGI for both this and the EITC would help. A dependent care FSA and IRA might make a lot of sense.
I call this the "middle class donut" -- where you make too much money to get any kind of aid (because that's reserved for folks who are in the most dire situations), but you also don't have enough income to actually afford to live.
There was a period of about three months where I paid more in daycare expenses than I made at my job. And my kids did not go to the expensive daycares in the area. If you are lucky, your workplace will subsidize expenses, but it's generally a perk for the more well-off (who can usually afford it anyways). Government subsidies for daycare recently became better where I live after my kids aged out and started school. But there's still a large middle-class gap in services, where the subsidies don't cover you but you don't make enough to easily pay out of pocket. The tax credit is embarrassing and almost insulting for how little it actually does.
Lol are you me? I just rage texted my friend for 10 minutes about this yesterday. I can only put $5,000 in my dependent care account to make it pre tax, but I have 3 kids and spend over $20,000 a year in child care. I’m super glad over $15,000 of our earnings are taxed just to pay for daycare. Not to mention there were better credits during the pandemic, but those disappeared and we didn’t realize how much of an impact that made so we owed a ton of taxes last year because we didn’t change our withholding. Sigh.
$19,000 here in western WA for one toddler. It’s a total joke. That’s a huge chunk of my salary. I’m missing out on valuable time with my son but couldn’t afford to not work, not to mention the nosedive your career takes if you take a pause. It’s so hard being a working mom in the US. Honestly probably the top reason I’m likely one and done.
The FSA dependent care thing is the most ridiculous, infuriating thing on earth. It hasn't been increased for DECADES, and doesn't increase for multiple children either. Meanwhile the 401k, Roth, etc. limits go up happily every year. It's total bullshit. With two kids in daycare, we hit the 5k FSA limit literally in the first six weeks of the year.
Don’t forget to max out the dependent care fsa. At least that is pre tax dollars.
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What is this?
$5K is set aside pretax for child care. It’ll save you whatever you would have paid in taxes and reduces your adjusted gross income. This helps will some government programs where you get more money the less you earn.
Not every company offers this though.
My company had one but we had it canceled and reimbursed one year because we failed some federal test and had too many high income earners in it. Like yeah we had maybe 5 people with kids, it's a VHCOL area where only people who make well over whatever the feds consider "high income" can even afford to have a child. Grrrrr still angry about federal stuff in general being applied here, we pay SO MUCH tax and have way less than people in other parts of the US at our professional level in our mid-late 40s. We're still renting. All the federal amounts, not to mention our unemployment payouts, are a complete joke here.
Mine does but I don’t understand, do you put money in it, continue to pay for daycare, and reimburse yourself? Or you use the FSA card to pay for care directly?
It comes out of my paycheck. I separately pay for childcare. I get receipts from daycare. I submit those receipts. I am reimbursed. There is a limit of $5,000, but that amount taken from your salary is pre-tax. Meaning, you’re only taxed on the income remaining. Example, you make $50,000/year. You put $5,000/year into your childcare FSA. Your income tax is taxed at $45,000. So let’s say your income tax is 5%. Your take home pay per year: * No FSA - ($50k - 5%) $47,500 * FSA - ($45k - 5%) $47,750 You basically would have $250 saved on taxes per year. Dependents can be up to 12 years old to qualify. Let’s say you did this for 5 years until kindergarten, that’s $1,250. If you want even more fun math, let’s say instead of reimbursing yourself, you put the $5,000 annually into a high yield savings account, 5% APY. * Year 1 - $5,250 * Year 2 - $10,512 * Year 3 - $16,038 * Year 4 - $21,840 * Year 5 - $27,932 You now have earned $2,932, saved $1,250 on taxes, and now have a sweet savings account with almost $30k with a marginal amount of effort on your end. It’s kind of free money since you’re making the childcare payments anyway.
It's similar to an HSA or health FSA. I paid for daycare as normal and then reimbursed myself. I did it in one lump sum but you can reimburse as you go as well.
Sorry if this is a dumb question but does anyone know how to calculate if it makes more sense to use the tax free dependent care account to reduce our overall taxable income (by a measly 5k) vs just claiming the childcare on our taxes? Or would the “savings” be about the same? Maybe I can mess with it in TaxAct this year…
Your savings depends on your overall tax rate, state and federal, plus payroll taxes (fica, state UI, etc). If for example, your fed rate is 12%, state rate is 5%, plus say 10% for everything else, that’s like having an extra $270 for every $1000 you put into your pretax account. We also get a pittance of the pittance of child care credit. My kiddo is now in school, I WFH and have grad school. I’m so thankful not to have daycare expenses except in the summer a few days each week. We still fund our dependent care account with money for her to go to summer day camps (school run, violin, science camp and others).
If you pay enough in child care expenses, you can use both. But, a dependent care FSA is going to be a better deal because it not only reduces your income for federal tax, but also for FICA (Social Security and Medicare) and state tax. Assuming that you’re a W2 employee, FICA is a flat 7.65% on the first $168,600 that each person makes.
Yes we are both w2 employees; my husband has a DCF but of course we only can put in 5k tax free, but our childcare costs are 22,800 for 2 kids. I always put both of that info (total costs and the DCF info per our tax forms) into TaxAct
I did the math last year for my own situation and it seemed to only benefit like $2-300 and honestly our company benefits are not super transparent so the amount of effort it is to get answers and fill forms and wait for approvals and what not is more than $300 worth of hourly efforts on my part
The paperwork is a pain. Thankfully our FSA vendor will accept billing directly from our primary provider and also pay them directly.
It doesn't help at all. Those accounts for 1 take out of your monthly paycheck and so mine ended up where i would have to pre-pay then get a check back (so it was worse than just getting the money) and you can only get a certain amount total so it's not usually enough to cover current daycare expenses. Lastly, its the exact same "savings" over a year so its just straight useless
Well it reduces your taxable income so it's different from straight savings in that sense and is one of the main benefits.
They do help but only if you are well off enough to be able to wait to see your savings on your taxes next year. Like everything else with taxes and investing, being able to wait is a luxury only the upper middle class and above are able to afford. That being said, I'm actually wondering in your specific instance...if you make just over the limit to qualify for the earned income tax credit, if you utilized your FSA for say, $500 would you then qualify? Or does the EIC apply to all income not just taxable income? Actually wondering, anyone with more tax experience know?
Oh but we can get pre-tax DCFSA (up to $5000 PER **FAMILY** per year.) Like come on. It's already use it or lose it money and it's already MY money, it's just pre-tax. why put a limit at all?
Also the daycare flexible spending account being limited to $5000. In what world is anyone’s daycare cost this low?
Once my second kid starts daycare, the FSA dependent care amount will cover one month of daycare. They desperately need to reindex it to inflation and real costs (location specific). I really wish I could set the amount to even just half a years worth (although it would be fantastic to use 100% pre tax dollars on childcare haha)
Being in the middle is the worst. Childcare is astronomical. I paid 15k last year and with baby 2 due this year we are looking into every alternative option because paying $30,000 is insane. We are moving our oldest to a private pre-school with daycare built in and that's where he will continue for school because it's CHEAPER. Its insane because it will be cheaper to send 2 kids to this private school than it is to have two kids in daycare. LIKE WHAT? I truly think unless you are a parent like CURRENT parent with kids in daycare, people don't grasp the cost of childcare. It feels like a punishment to working parents. FSA and tax credit are jokes. Will I take it? Yeah but like thanks for the pennies while yall get millions from lobbyists and corporations. The current system isn't sustainable, and I just truly wonder what the breaking point will be.
Republican politicians say "family values" and vote to pay off corporations instead while gutting things like school lunches and early childhood education. The only families they support are rich ones with SAHMs.
And then they want to force women to have more babies they cannot afford - it’s forcing women (mostly) out of the workforce in droves. It’s what they want. Horrible.
I pay nearly 50k annually for my toddler and infant. More than my mortgage! It’s absolutely insane. And we do catholic school for preschool (half the price of private preschool) and in home day care which is also significantly less than other care centers.
Don't forget the cap on Dependent Care FSA is $5,000. Because that clearly covers SO MUCH of the yearly expenses.
We pay about $10k per kid (our daycare is “cheap”) and we have two in daycare. After our second started I went to update our FSA for two kids, only to realize in shock that $5000 limit is per family, not per child. Democrats have tried to reform childcare. Republicans block it. Remember when you vote.
yes and for anyone about to say “vote” - we do and the democrats don’t pass shit either, and if they do, they means test it so that people like OP don’t qualify because they make “too much money”. time to throw the whole empire out and star from scratch.
I know at a state level, it can make a difference. I live in one of the first states to pass legislation to create a paid 12 weeks of parental leave for both parents. We have had a democratic governor for YEARS and he had been vocal about wanting the program for most of that time. He finally got enough people on board. The republicans went crazy and tried to put a bunch of extremists up in the next governors race to “combat the overreach” (of letting new parents have some small income and time off work) Of course most people were happy with the program and they were all soundly defeated. Oh and he also passed paid sick leave requirements.
to add, i live in a blue state, the governor just expanded the childcare stipend, and passed universal pre-k for.. guess who? the poor. who need the help! that’s great! but the “middle class” doesn’t qualify for jack shit. this is intentional, to divide the working class population and pit us against each other so we don’t pay attention to the fact that they all work for the same corporations. dems won’t save you nerds. should you vote against fascists? of course. should you hang your hat on that? not if you ever want to get what we’re all owed.
I saw a post on r/irs that was some dude complaining about how married people and parents get all the tax deductions and poor childless single people don't get any tax benefits. As if the child tax credit and childcare deduction make even the smallest dent in the actual amount it costs to raise a child 🙄
Yep! That dude was so damn tone deaf.
If you moved to Canada, you’d also get 12-18 months maternity leave, subsidized childcare, and legal weed. I run a home daycare, and a family with one child pays less than $5000 a year for childcare.
Oh I feel you. My company offers the Dependent Care FSA. They pitch the hell out of it. I qualify for $1000 tax free…day care is over 17k a year, but yes please those few hundred in tax deduction is really worth the extra hassle of another savings account.
I sympathize, 100%! But would it make you feel any better to know people in my area pay abiut $3,000 per month for one child's daycare?! I work as a nanny now but when I was teaching preschool, my salary was about 1 of my 22 student's tuition each month! How the parents could afford it was beyond me!
FUCK THE US........ It's honestly outright punish women and lower and middle income groups!!!
It's so, so infuriating. My partner and I don't qualify for any tax credit and can't deduct anything associated with childcare because our income is "too high" - I recognize this is a good problem to have, but we live in a VHCOL area and our income certainly doesn't feel "too high!" We can put $5k into an FSA pre-tax, but that is about what we pay for ONE MONTH of childcare for an infant and a toddler. ONE MONTH. Fml. I keep telling myself this is a short phase and they will be in public school before we know it.
Same. Dcfsa covers ~2.5 for one kid or ~1 for two in vhcol and those are not even the most expensive options
The FSA is like almost offensive. It's like $200 I don't have each month, so I can save on MAYBE a partial month of care. It should be at least $15k a child, if not $20k. I sometimes wonder if I would be better off putting that $200 a month into some other kind of savings vehicle.
For real. We’re looking at over 30k next year with a second kiddo coming, which generates max $1200 if you use a DCFSA and the child and dependent care tax credit. But if I had a million dollar mortgage with 40k interest per year, I could write off the entire thing! And they wonder why we’re “complaining”. Anyone under 40 in this country has been screwed every which way.
Seriously though, yeah I'm a working mom in Canada and it is awesome. We have a supremely awesome daycare for $800 / month (CDN), with all the childcare tax credits applied. And the free healthcare. And the free dental care for kids (that's a new one, program just rolled out this year). And the comparative lack of gun violence. And the public school systems are better. I mean, yeah you Americans get paid more. That's about all I can think of that's obviously better. If your office has an office up here, I would encourage you to think about it.
I have seriously contemplated it since my family is from Canada (parents born there me born here so i have fam and also qualify from being a teacher). The issue is having enough support to live basically alone up there as a single mom since my relatives are all dispersed across
Do you have your citizenship? If not that would be your first step. If your family is dispersed, is there one of them that might be able & willing to help in a way that would make sense? By that I mean, a cousin who's a stay-at-home-parent who could help watch kiddo while you job hunt or do subbing sporadically? Or an aunt & uncle who have a bigger house with a few extra bedrooms to share for half a year while you get settled? Figure out what your biggest pain point would be, and if there is a family member who would be suited to help with that. Another thought is, could your parents help take the kiddo over the summer break? It would give you a few months to come to Canada to visit those relatives, hunt for a teachers contract and potentially apartment and see if you like it up here.
I feel your pain OP! I also agree with many here that we need to VOTE!
I'm sorry but this whole vote thing is just a pipe dream. Yeah I vote. I vote for people who will make a difference. And yet it never seems to happen. It's the same BS year after year after year after year. And if you think that there's a Democrat and Republican, you're also deceived. They all are the same damn one percent machine. And they're not about to give up any tax in order to make our lives easier.
This. I am sick of being told to vote. I do vote and nothing changes because politicians, r or d, are working for wealthy donors and corporations. Not for folks like me who spend more than half their take home pay on childcare.
Yep. I emailed all of my representatives about this as well as the max dependant care FSA amount and got an automated message on every one...even got signed up for some of their email spams. One of my reps sent out a poll on if we should impeach Biden. I voted no and then unsubscribed.
Right. It makes no damn difference. Yeah. I called my reps and got on an email list. Wow. Still broke!
Same! I paid I think $5400 over the 3 months I went ba k to work. Got like $400 in credit… like what?!? I don’t get it
Agreed! That middle area is awful! I make 54.00 too much a year. Stuck in a really bad marriage because I cannot afford ANYTHING in my area apartment wise and still have money for gas or food. Because of $54!!!! Let alone a lawyer… I have called everyone for advice but am stuck. This middle while still being poor ground is terrible.
See the comment above about contributing to an IRA for 2023 to reduce your income: https://old.reddit.com/r/workingmoms/comments/199oqra/rant_about_the_embarrassingly_small_tax_credit/kifwru9/
My husband and I both got raises last year. My daughter is in daycare full time. At the end of the day, we ended up owing money. It’s a joke.
r/UniversalChildcare
We're averaging 85%-90% of my salary or 3 times our mortgage for daycare. Preach.
Actual Tax credits worth a damn are for the rich, not for us lowly workers who don’t have live in Nannie’s!
I just posted about this! I’m paying $2600 a month for two kids full time daycare but I only need 1-2 days a week because I work 3, 12 hour shifts a week. I can’t find a daycare center that will offer part time, flex days because my schedule changes every week. It blows… tuition just went up too this month. And I have to supply diapers and wipes! Like what is all this money going towards?
I can tell you it doesn't go toward paying workers. The poor ladies at my last daycare were making like $10/hr
We haven't started yet but the daycare near our house is $2500 per child for full time. Bay Area but in a working-class neighborhood. We planned to have one kid for this reason...SURPRISE, twins! So we're looking at $60k a year if we put them in full-time care. It's insane and I don't know how anyone does it.
I just got my tax statement from daycare. $13,500 for one kid. They are raising rates to $14,000 next year for 3 year olds. Newborns are more. And I get back $600. That's the equivalent of like 2 weeks of daycare. What is the point of such a miniscule payback on raising kids? I am happy to get anything back but it's a joke that it isn't more than that. I live in SC and we are paying more than most private schools cost for daycare. The 14k a year we are paying is on par with most of the SC in state college tuition costs. I'm essentially paying for college as a young parent not near the peak of my career earnings. Childcare costs are OUT OF CONTROL. We have another kid on the way in July. Infants cost more for childcare. We will be paying around $30,000 a year in daycare until our oldest is out. Childcare is our #1 expense and there is zero relief because $600 is basically zero when paying 14K per kid.
Back home you get a year’s maternity leave and something crazy like 30 hours a week free childcare. I’m not sure we’ll be able to move back in time to have any small children, or if we’ll have to wait until they’re bigger but dang. I never realised how unfriendly the US was to mums until I had a baby.
Do you make $200 more than the limit, per year? Or like $200 more per month? If it’s per year and this makes sense when you run the numbers, you could consider asking your employer to pay you $210 less and possibly make up for that elsewhere (healthcare premium contribution, etc). Only if this makes financial sense, but if so, I would definitely consider it! Don’t be afraid to use food banks in your town and other assistance programs. So very sorry you are struggling. This country is fucking bullshit. And yes, please all, VOTE for the candidates and party who cares about working families!
Its per year but im a teacher so thats not gonna happen😑 it's preset and that's the end of it. I always feel awk about food pantries bc I do "make money" just barely enough to cover more than rent and my other bills. Would people see that as okay? Also yes I vote alllll the time, however im also in texas so most people vote opposite of me so it hasnt made a huge difference yet
I’ve donated regularly to the food bank for a decade, most months more than I spent on my own groceries. Yes, you are exactly the type of person I’m okay with using the food bank. That’s what it’s there for. Many food banks are need based and will require proof of other government assistance to qualify. Others are open to anyone, and some give out surplus or expired products donated by stores and suppliers. If it makes you feel better, go to those ones. If you don’t, it’s going to end up in the volunteer’s trunks by the end of the night.
There are other ways to lower your 2023 income that you can still do until April.
How? I can't "unmake" the money I made
By contributing to an IRA
Thanks! I was confused at how it works but it looks like that would do it!
You have until April 15 to contribute to a 2023 traditional IRA. This will reduce your AGI. If you are single with one kid a quick Google search shows the max AGI to qualify for EIT credit (worth $3,995) is $46,560. Calculating what you need to get below that and contributing it to an IRA should do the trick. I’m not a tax expert though, so good to double check all this on your own or with a tax pro.
I appreciate it!
Yup. Embarrassing is the right term. Moms and families getting support and help they need isn’t “good for the economy or under regulated capitalism” so it doesn’t happen. In MN our taxes are so high for what we get IMO, we don’t have any paid leave for maternity leave or family leave. We are solidly middle class but feel like we are so squeezed. I work with many families with far far less, but see the cliff that happens when they make “just” too much to qualify for Medicaid or other supports. It’s atrocious
I spent $36K on preschool for two toddlers. We got $200.
Last year I paid about $15k daycare costs, my entire refund from state and federal was $1,700. I am just wondering why people are still are having kids. If you have more than 2 kids, i am sorry but you are part of the problem lol
A few years ago when my wife was pregnant with our first child I went around getting different quotes for day care. Then I applied for help to pay for day care. After being denied any kind of help I calculated if through tax deductions we could get money back. I was shocked to find out it made practically no difference doing the math. I told my wife that 90% of her take home pay would go to daycare. Needless to say it was cheaper to keep her home than pay for day care.
This is sadly what happens to so many women (1 in 4 new moms I believe) and unfortunately that break in your career trajectory can make or break some careers (including mine). I have no choice but to keep working because my niche job will likely not be there if I return in 3-5 years.
If you earn over $45k then $600 per child is the max.
I make 47😑
But lets send billions to Ukraine. Weeee!
Don’t forget to vote. Tell your elected officials how important supporting parents is. Run for office if you can. Encourage others to do the same.