Parents with limited resources may want to consider daycare assistance for their children. Government assistance is available in the form of tax credits for families who meet income eligibility requirements. Parents may also opt to establish flexible spending accounts through their employers to pay for childcare costs. In addition, states provide early education programs and government assistance to families who meet certain income eligibility criteria.
Earned Income Tax Credit
The Internal Revenue Service (IRS) provides the Earned Income Credit (EIC) to assist low-income families with children. The 2009 EIC income requirements for married couples filing jointly are: $48,279 for couples with three or more qualifying children, $45,295 for couples with two qualifying children and $40,463 for couples with one qualifying child. The tax credit amount for married couples filing jointly is $5,657 for three or more children, $5,028 for two children and $3,043 for one child. These credits may help to offset the cost of daycare.
Dependent Care Tax Credit
The IRS also offers a dependent care tax credit to assist families in paying for daycare, while they are working or looking for work. The amount of the credit is a percentage of the money parents pay for eligible childcare during the year. The credit is also based on the parents' adjusted gross income.
Flexible Spending Accounts
Parents may also choose to establish flexible spending accounts (FSA) through their employers for childcare expenses. Money in an FSA is not taxed and pays for childcare for children under age 13. The money is deducted from the employee's paycheck and is deposited into the FSA. This type of account has the benefit of allowing childcare expenses to be deducted from an individual's gross salary free from federal income tax.
Head Start
Head Start is a free early education program for children ages 3 to 5 from low-income families. According to the United States Department of Health and Human Services, 2009 income requirements for the Head Start program are: $25,790 for a family of five, $22,050 for a family of four, $18,310 for a family of three and $14,570 for a family of two.
State Government Assistance
The federal government funds the Federal Social Services Block Grant (SSBG) Program. This program allows for funds to be distributed to states in support of social service programs, including childcare programs. Each state determines the income eligibility guidelines for its childcare programs, based upon the budget and the amount of funding the state receives. A list of state programs and income requirements is provided by the National Child Care Information and Technical Assistance Center. Parents can research their state's individual income guidelines to determine whether they qualify for childcare assistance.
