Employer Paid Childcare Credit
Do you provide childcare services to your employees? My, are they fortunate! There is also good news for you. The IRS is now providing a tax credit up to $150,000 per year to offset 25% of qualified childcare facility cost and 10% of qualified childcare resource and referral cost. The Employer-Provided Childcare Credit is a beneficial incentive to encourage employers to provide these services.
How do you qualify? You must have paid or incurred qualified childcare expenses during the tax year for childcare services to your employees. Qualifying expenses are as follow:
- Qualified Childcare facility- Costs associated with the acquisition, construction or rehabilitation or expansion of property used for the purpose of childcare.
- Qualified Childcare facility costs- Operating expenses, childcare workers’ payments, and scholarships programs, etc.
- Qualified resources and referral- Expenses incurred when you contract with qualified childcare facilities for your employees.
How do you claim the credit? You must use Form 8882, Credit for Employer-Provided Childcare Facilities and Services. This tax credit can be complicated and has quite a few stipulations. We recommend that you utilize the expertise of Lakeesha Browne, CPA. Submit your inquiries on our contact page or schedule a consultation.
Work cited:
“Employer-provided childcare credit.” IRS.gov, 8 Nov. 2019. www.irs.gov/businesses/small-
businesses-self-employed/employer-provided-childcare-credit. Accessed 6 Jan. 2023.
