Paying for Child Care

The cost of paying for child care is a major consideration for most families. Many families today are spending over half of their income toward high-quality child care programs. There are many reasons why child care can be so expensive. Some of the reasons include high ratios of adults to children, teacher or provider qualifications, location of care, and costs of space, insurance, equipment, and special programs. Quality care for infants and toddlers can be especially expensive, due to small group sizes. Hiring an in-home caregiver tends to be the most expensive form of care, followed by centers and family child care homes.

Find out more about the cost of care, government assistance, employer-sponsored programs, and tax credits that may be of benefit to you.

Assistance in Paying for Child Care

South Carolina parents who meet established income guidelines may be eligible for assistance with the cost of their weekly child care. You may be eligible to receive child care assistance through the SC Department of Social Services if one or more of the following situations apply to your family:

• You are working or are attempting to find work
• You are in school or in a job training program
• Your child is receiving child protective services
• Your child needs care to support child welfare services or if your family is experiencing a crisis
• Your child has developmental needs

For more information, please contact the SC Department of Social Services Family Independence Program (http://www.state.sc.us/dss/fi/).

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Head Start Programs

Head Start is a national program that provides comprehensive developmental and social services to America’s low-income preschool children and their families. The Head Start Program began in 1965 to give children of low-income families access to preschool programs. The program is administered by the US Department of Health and Human Services, through the Administration for Children and Families.

There are four major components of the Head Start Program:

• Education: This component serves children’s cognitive, social, and emotional growth. Great care and consideration is given to ethnic and cultural curriculum.
• Health: Families receive services related to medical, dental, mental, and nutritional heath. The Head Start Program emphasizes the prevention of health problems.
• Parental Involvement: Parents are able to serve on advisory boards and program-planning committees, volunteer in the classrooms, and attend parent-education sessions.
• Social Services: Social service teams work to identify the needs of a family and find appropriate community-based referrals.

In 1994, Head Start established a program to serve low-income infants, toddlers, and pregnant women, called Early Head Start. The main focus of the program is to promote children’s development in physical, social, emotional, and cognitive areas, empower parents to develop better parenting skills, and help parents reach their goal of economic independence. Services that are available through the Early Head Start Program include:

• Home visits, which include developmentally appropriate early childhood education
• Parent education
• Comprehensive health services
• Support services for families, including case management, referrals to community resources, and peer support

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Tax Information

Child and Dependent Care Tax Credit: Helps families pay for child care for children under the age of 13, if the parents are working, or looking for work. Parents who are full-time students can also claim the credit. Qualifying care includes child care centers, family child care homes, and care provided by paid friends or relatives -- as long as the relative is not a dependent of the taxpayer. The size of the credit depends on the number of children in care, your family income, and the amount you paid for child care during the tax year. There are limits on the credit given for one child, and two or more children.

Earned Income Tax Credit: A refundable tax credit for low- and moderate-income families, particularly those with children. The EITC is based on family income and the number of children in the family. Both single- and two-parent families are entitled to the credit, as long as one parent is employed. A number of states have their own Earned Income Tax Credits; check with your state department of revenue for more information.

State Tax Credits:  Twenty-four states have state tax programs related to the Child and Dependent Care Credit. Check with your state department of revenue for more information.

In-Home Care or Nanny Tax: When you hire an in-home caregiver, you become an employer under federal law. You need to be aware of laws regarding taxes, verification of employment eligibility, and minimum wage. For information on these topics, contact the Department of Labor , the Internal Revenue Service, an accountant, a tax advisor, or an insurance agent.

Volunteer Income Tax Assistance Program (VITA):  Free Tax Assistance.

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DCAP and Employer-Sponsored Assistance

Dependent Care Assistance Plans: Some companies offer a DCAP program, which allows employees to set aside up to $5,000 of their pre-tax salary per year to pay for dependent care expenses. There are certain restrictions that apply -- e.g., unspent funds are usually not refundable to the employee. Speak with the benefits coordinator at your workplace for more details on the plan.

Employer-Sponsored Assistance: Many employers now offer some form of employer-sponsored child care assistance to their employees. Some examples of assistance include:

• Matching funds or subsidy programs that are paid for by the employer for employees’ child care needs. This is offered as an employee benefit.
• Work and family resources, offered through the HR department, that may include enhanced CCR&R services in child care, elder care, and work/life issues.
• Employer funding for camp programs for employees’ children during school and summer vacations.
• Some employers offer on-site care for mildly ill children and emergency back-up care.
• Many employers find that providing on-site child care creates benefits both for the employee, by providing reduced tuition costs and stress-relief, and for the employer, with increased productivity, retention, and hiring incentives.

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