Tax Reform Now! Part 2
〈 While the tax law has a credit for child care expenses, the maximum credit for 2006 was only $1,050 well below most families’ actual expenses. Further, there is no tax relief for uncompensated care provided by a relative, friend or family member.
〈 Parents lucky enough to work for an employer who provides a flexible spending account may set aside up to $5,000 of annual pretax wages to purchase child care services.
〈 Employers can provide an unlimited amount of day care on-site all tax-free; however, if the employer provides additional compensation to the employee to purchase day care services, the benefit is taxable. 3
If the labor market were truly free, the needs of working parents would be factored in.