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Businesses: The Employer-Provided Childcare Tax Credit is Worth Up to $150,000

Posted by Admin Posted on June 25 2024

The Employer-Provided Childcare Tax Credit is an incentive for businesses to provide childcare services to their employees.

About the tax credit

This tax credit helps employers cover some costs for childcare resources and referral and for a qualified childcare facility. A qualified childcare facility is one that meets the requirements of all laws and regulations of the state or local government in which it’s located.

The credit is worth up to $150,000 per year to offset 10% of qualified childcare resource and referral costs and 25% of qualified childcare facility costs.

Who is eligible

To be eligible for the credit, an employer must have paid or incurred qualified childcare costs during the tax year to provide childcare services to employees.

Qualified childcare costs are:

  • Costs associated with acquiring, constructing, rehabilitating or expanding property used as the taxpayer’s qualified childcare facility.
  • Operating expenses paid by the business, including amounts paid to support childcare workers through training, scholarship programs and providing increased compensation to employees with higher levels of childcare training.
  • Qualified resource and referral costs which include amounts paid or incurred under a contract with a qualified childcare facility to provide childcare services to employees of the taxpayer.

How to claim the credit

Employers should complete Form 8882, Credit for Employer-Provided Childcare Facilities and Services, to claim the credit. The credit is part of the general business credit subject to the carryback and carryforward rule. This means employers may carryback unused credit one year and then carryforward 20 years after the year of the credit. Taxpayers whose only source for the credit is from pass-through entities can report the credit directly on Form 3800, General Business Credit.

Businesses can find out more at the IRS Employer-Provided Childcare Tax Credit page on including, more information on claiming the credit and the requirements for qualified childcare expenditures and qualified childcare facilities.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, International Taxation, IRS Representation, U.S. Tax Implications of Real Estate Transactions or Financial Statements, please give us a call at +1-305-274-5811

Source: IRS      

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