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7 Child Care Subsidies that Every Family Should Know

Julia Quinn-Szcesuil
April 18, 2018

Find out if you qualify for subsidies, programs, and resources that can help with child care costs.

You might think you can't afford to hire a nanny, but families often qualify for different child care subsidies, programs, and resources. The average American family pays about $18,000 per year in child care expenses, so working families will welcome the help with financial assistance of any kind.

"Most families that pay their nanny on the books will qualify for tax breaks that can significantly reduce their child care costs," Tom Breedlove, director of Care.com HomePay said. "It's important that they understand what is available, though, so they don't leave money on the table."

We've outlined a few resources to get you started.

1. Dependent Care Accounts

The federal government offers this type of Flexible Spending Account (FSA) through your employer.

If your job offers a Dependent Care Account, you can put aside up to $5,000 in pre-tax dollars to pay for child care expenses. If both you and your spouse have access to this FSA, the family limit is $5,000 -- but you could get as much as $2,000 in tax savings if your combined contributions reach the maximum.

2. Tax Credits

Working families can also qualify for a tax break with the Child and Dependent Care Tax Credit (IRS Form 2441), but many don't realize they're even eligible. When you file your personal income tax return at the end of the year, use the form to itemize up to $3,000 in child care expenses per child ($6,000 maximum), which brings about $600 per child ($1,200 maximum) in tax savings.

If you have more than one child and have access to an FSA, you can use Form 2441 for the additional $1,000 in child care expenses to save an additional $200.

"Families can't use their FSA and Form 2441 for the same expenses, so that's why a family in this situation can only claim $1,000 toward the Child and Dependent Care Tax Credit," Breedlove said.

3. State Assistance Subsidies

Individual states offer financial assistance for child care, but the aid varies widely. Most assistance is administered through the Child Care and Development Block Grants. Scroll to the bottom of this article to find the contact information for your state.

Many subsidies have strict income guidelines and are generally for families with children under 13. (The age limit is often extended if the child has a disability.) Be sure to check the requirements because many subsidies permit home-based care, but some only accept a day care center. If you need to use an authorized provider, ask if they will put you in touch with an agency that can help you find one.

Some states distribute funds through social or health departments or agencies (like this one in Washington State). For example, the Children's Cabinet in Nevada can refer families to providers, help them apply for subsidies, and can even help families who want to pay a relative for care. North Carolina's Smart Start is a public/private partnership that offers funding for child care. Check the National Women's Law Center for each state's child care assistance policy.

4. Employer Subsidies

In addition to offering an FSA, your workplace might offer subsidies or benefits to help pay for child care costs. Some companies, like the National Institutes of Health, offer child care subsidies. Check with your company's human resources department for any available benefits. Learn more about the workplace care benefits you could be getting.

5. Student Subsidies

If you or your spouse is a student, check with the school to see if they offer any financial assistance for paying for child care and the type of care they cover. For instance Oregon State University offers a plan that helps pay for various types of care. Some universities also offer low-cost, on-campus child care for eligible students.

Some states have grants for degree-seeking students to help pay for child care, but they're often distributed through offices of varying names. In Massachusetts, the funds are issued through the Executive Office of Education; in Oregon, it's through the Office of Student Access and Completion; and in Utah, it's through the Office of Child Care. Again, your school may be able to point you in the right direction.

6. Sliding Fee Scales

Some child care centers offer a sliding scale or a scholarship for low-income families who can't afford the regular rates. Investigate centers to find your top five, and then ask about rate options.

7. Military Family Subsidies

If you're in a military family, the government offers military family subsidies through various agencies, depending on the military branch for which your family member serves.

Child Care Assistance Grantee Contacts by State & Territory

Child care isn't cheap, but with a little work, you can find ways to save money that will help you afford the right care for your family. Search for child care here.

Julia Quinn-Szcesuil is an award-winning freelance writer and a mom to two girls. She lives in Massachusetts and has written for local and national publications.

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