IRS Highlights Childcare Tax Credit

The Internal Revenue Service is highlighting the federal Employer-Provided Childcare Tax Credit.

The credit offers employers up to $150,000 annually to offset 25% of qualified childcare facility expenditures and 10% of qualified childcare resource and referral expenditures.

It’s designed as an incentive for businesses to provide childcare services for employees.

To be eligible for the childcare tax credit, an employer must have paid or incurred qualified expenditures during the tax year. 

Those expenditures include: 

• Costs associated with acquiring, constructing, rehabilitating or expanding property used as a childcare facility
• Operating expenses, including amounts paid to support childcare workers through training, scholarship programs, and compensation
• Qualified resource and referral expenditures, including amounts paid or incurred under a contract with a qualified childcare facility to provide childcare services to employees

The IRS defines a qualified childcare facility as one that meets the requirements of all applicable state and local government laws and regulations.

Employers can complete an online form to claim the credit.