Childcare....

[TheHaitian]

Read this article this morning :

www.npr.org/2016/10/22/498590650/u-s-parents-are-sweating-and-hustling-to-pay-for-child-care

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.

Now in 2016 with childcare costing about $2,000/month in my area that is barely 3 months.

Should the government increase that amount?

And childcare is one of those things in America where it seems it is easy good to be poor or rich: middle class you are screwed!

In DC for example you are poor you get vouchers for daycare, rent, etc. Rich you can afford it so a non issue... middle class on paper and it is a struggle.

[Deleted]

A lot of those credits/deductions haven't changed in decades.  I was curious why I was no longer getting education credits and the income limits were set almost 20 years ago and haven't changed!  35K was probably not too shabby back in 96!

With childcare, the 5K is a deduction, not a credit...but yeah, if you're in a HCOL area, it probably doesn't go far.  Here, I never paid more than 6K/year even recently.

[Deleted]

I was never able to take the child care credit anyway- would have had to give up the SSN of his daycare provider and she didn't want to provide it.  (Yeah, I know why.) 

They should increase the credit, though. It's good policy- might encourage more mothers (typically mothers) to go back to work when weighing their options and that's more tax revenue.  

[taz157]

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.


If that references the Flexible Spending Account, it is $5,000 for the year (not month) regardless of the number of children.

The Child Tax Credit is $1,000 per child, but it has income limitations (then you get nothing) and I think there's a limit to the number of children too.  FWIW, most of clients that have children don't get any benefit of the Child Tax Credit as they make too much.

[travelnut11]

Yeah, the $5000 per year FSA limit is a joke. It's a fraction of what I pay in CC for one kid...next year when we have two in daycare it's going to be a tiny fraction. I don't understand why it hasn't been raised in forever either. I expect we will get no benefit from the the Child Tax Credit as we make too much.

[Sam_2.0]

Oct 26, 2016 13:00:06 GMT -5 travelnut11 said:

Yeah, the $5000 per year FSA limit is a joke. It's a fraction of what I pay in CC for one kid...next year when we have two in daycare it's going to be a tiny fraction. I don't understand why it hasn't been raised in forever either. I expect we will get no benefit from the the Child Tax Credit as we make too much.

That's kind of my only upside to DH's work situation. Another dependent plus lower income

[973beachbum]

Oct 26, 2016 12:56:44 GMT -5 taz157 said:

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.


If that references the Flexible Spending Account, it is $5,000 for the year (not month) regardless of the number of children.

The Child Tax Credit is $1,000 per child, but it has income limitations (then you get nothing) and I think there's a limit to the number of children too.  FWIW, most of clients that have children don't get any benefit of the Child Tax Credit as they make too much.

There is also a child CARE tax credit.  I used to get to claim both the child care and the child tax credit.   At least IICR i got to claim them.  I know that I had to go get the daycare's tax ID every year when the kids were little and I didnt need to do that once they got old enough to not need daycare.

I didn't think it was $5K though.  $3K is the number that comes to mind but it's been a while.

I guess a good question is can you double dip?  Can you have a flex spending account for $5K plus do $3K in post tax money and get the credit for that?

[travelnut11]

Oct 26, 2016 13:12:14 GMT -5 973beachbum said:

Oct 26, 2016 12:56:44 GMT -5 taz157 said:

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.


If that references the Flexible Spending Account, it is $5,000 for the year (not month) regardless of the number of children.

The Child Tax Credit is $1,000 per child, but it has income limitations (then you get nothing) and I think there's a limit to the number of children too.  FWIW, most of clients that have children don't get any benefit of the Child Tax Credit as they make too much.

There is also a child CARE tax credit.  I used to get to claim both the child care and the child tax credit.   At least IICR i got to claim them.  I know that I had to go get the daycare's tax ID every year when the kids were little and I didnt need to do that once they got old enough to not need daycare.

I didn't think it was $5K though.  $3K is the number that comes to mind but it's been a while.

I guess a good question is can you double dip?  Can you have a flex spending account for $5K plus do $3K in post tax money and get the credit for that?

I believe you can claim both but not for the same expenses and I think it's capped at $6K total expenses. So you could take $5K as FSA and then the $1K for child care tax credit which at 20% would only be a $200 credit.

[Deleted]

Oct 26, 2016 13:12:14 GMT -5 973beachbum said:

Oct 26, 2016 12:56:44 GMT -5 taz157 said:

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.


If that references the Flexible Spending Account, it is $5,000 for the year (not month) regardless of the number of children.

The Child Tax Credit is $1,000 per child, but it has income limitations (then you get nothing) and I think there's a limit to the number of children too.  FWIW, most of clients that have children don't get any benefit of the Child Tax Credit as they make too much.

There is also a child CARE tax credit.  I used to get to claim both the child care and the child tax credit.   At least IICR i got to claim them.  I know that I had to go get the daycare's tax ID every year when the kids were little and I didnt need to do that once they got old enough to not need daycare.

I didn't think it was $5K though.  $3K is the number that comes to mind but it's been a while.

I guess a good question is can you double dip?  Can you have a flex spending account for $5K plus do $3K in post tax money and get the credit for that?

It's 3K/kid for the credit (max 6K), but no, you can't double-dip.  When you apply for the credit you first have to subtract anything that went into your FSA. 

[Deleted]

Oct 26, 2016 13:41:45 GMT -5 alwaysbeoptimizing said:

Oct 26, 2016 12:48:59 GMT -5 TheHaitian said:

Read this article this morning :

www.npr.org/2016/10/22/498590650/u-s-parents-are-sweating-and-hustling-to-pay-for-child-care

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.

Now in 2016 with childcare costing about $2,000/month in my area that is barely 3 months.

Should the government increase that amount?

And childcare is one of those things in America where it seems it is easy good to be poor or rich: middle class you are screwed!

In DC for example you are poor you get vouchers for daycare, rent, etc. Rich you can afford it so a non issue... middle class on paper and it is a struggle.

it would sure be nice if a candidate were actually looking out for citizens.  note that Trump has had this up for awhile

www.donaldjtrump.com/policies/child-care/

www.washingtonpost.com/news/wonk/wp/2016/05/12/the-enormous-ambition-of-hillary-clintons-child-care-plan/

[TheHaitian]

Oct 26, 2016 13:52:20 GMT -5 alwaysbeoptimizing said:

Oct 26, 2016 13:45:33 GMT -5 minnesotapaintlady said:

www.washingtonpost.com/news/wonk/wp/2016/05/12/the-enormous-ambition-of-hillary-clintons-child-care-plan/

good to see she's got something too!

I'm concerned about government run daycares thorugh.

I know that the $2,800/month we put into daycare is an enormous kick in the jimmy.  Kindergarten next year when it should drop to around $1,200/month for before/after care.  woohoo

That is literally a raise for your family lol!

[giramomma]

Didn't read the article.

Higher daycare costs are why it's been better for us to have DH work part time. If we both worked full time, I don't think we could have three kids. We'd likely have to stop at 2 for daycare reasons alone.

I also think that the older the parents are, the more they of their budget is already committed. We were lucky after we got out of school. We kept our standard of living low. We kept our monthly expenses as low as possible. It made it easier to fit in our kid expenses and not feel like we were sacrificing or feel like we were going broke.

We have family that are going to be paying for daycare. They must make 150K. Daycare for one child is similar here as it is in their city, about 1500/month. I guess they have been having problems adjusting to this new expense. I think they are mostly shocked that they have to chose to live a different way. I really refuse to believe that someone making 150K minimally would find a temporary 1500/month bill to be cause them to be "completely broke" for the next decade.

[busymom]

After our first child arrived, DH & I started working opposite shifts, so one of us would always be home. No child care costs. But, the lack of sleep was a bit hard on us both.   Frankly, with all of the days off the kids get now in our school district, I don't know how even a two-parent household juggles when you need outside daycare.

[jeep108]

Oct 26, 2016 16:29:34 GMT -5 busymom said:

After our first child arrived, DH & I started working opposite shifts, so one of us would always be home. No child care costs. But, the lack of sleep was a bit hard on us both.   Frankly, with all of the days off the kids get now in our school district, I don't know how even a two-parent household juggles when you need outside daycare.

We did the same.

[dee27]

I found the logistics of childcare to be worse than the financing of the care, and I was never a high earner. With DD, I was fortunate to find a licensed daycare provider who was a former nurse, but she only worked during the school year. DD went to a different provider for the summer months until she was old enough for summer camp. After DS was born, my mom lost her job due to her company moving offshore. She was old enough to retire from a full time job and she offered to watch DS. I paid mom to care for DS all day and for DD before and after school, but the only back up care I had was drop off service at the Y. 

[TheHaitian]

Oct 26, 2016 14:19:57 GMT -5 giramomma said:

. I really refuse to believe that someone making 150K minimally would find a temporary 1500/month bill to be cause them to be "completely broke" for the next decade.

You can refuse to believe it but it is quite a possibility! Maybe not broke for the next decade if they stop at 1 but quite possible if they go for more than 1.

[CCL]

Oct 26, 2016 16:29:34 GMT -5 busymom said:

After our first child arrived, DH & I started working opposite shifts, so one of us would always be home. No child care costs. But, the lack of sleep was a bit hard on us both.   Frankly, with all of the days off the kids get now in our school district, I don't know how even a two-parent household juggles when you need outside daycare.

We did that for a while, too, worked opposite shifts. Lack of sleep finally got to us, so hubby volunteered to pick up overtime so I could stay home with them. In hindsight, I'd say that was one of the best decisions we ever made. I do understand that's not possible for everyone, but if there's any way you can swing it, I highly recommend it.

[giramomma]

Oct 26, 2016 22:29:27 GMT -5 TheHaitian said:

Oct 26, 2016 14:19:57 GMT -5 giramomma said:

. I really refuse to believe that someone making 150K minimally would find a temporary 1500/month bill to be cause them to be "completely broke" for the next decade.

You can refuse to believe it but it is quite a possibility! Maybe not broke for the next decade if they stop at 1 but quite possible if they go for more than 1.

Well, they are still cooking 1, so we'll see. Their RE won't let them having kids close together...I think they have to wait 2 or 3 years before trying again. That will put mom at 46, give or take, when #2 is born. She's still very set on having two. I think that when the realities of one set in, and they hopefully look into the future (which includes upgrading their house), that she'll realize that she can't have it all and will have to make some choices.

I think it's just more shocking, that after 20-something years, they won't be able to go out and spend what they want, when they want. They've admitted to "fluff" in the budget (like eating out more nights out of the week than cooking). They have top of the line gadgets and what not. I'm sure diverting money from something fun to something not fun like daycare...well...it's going to take some getting used to..but it doesn't mean that just because you can't do what you want, when you want financially, that one is broke.

[giramomma]

I can't work opposite DH all year...but I do it in the summer when my teaching load is reduced.

We all really enjoy it. For me, sleep isn't the issue. It's not not seeing my husband awake for more than 5 minutes a day.

[Lizard Queen]

Oct 26, 2016 14:19:57 GMT -5 giramomma said:

Didn't read the article.

Higher daycare costs are why it's been better for us to have DH work part time. If we both worked full time, I don't think we could have three kids. We'd likely have to stop at 2 for daycare reasons alone.

I also think that the older the parents are, the more they of their budget is already committed. We were lucky after we got out of school. We kept our standard of living low. We kept our monthly expenses as low as possible. It made it easier to fit in our kid expenses and not feel like we were sacrificing or feel like we were going broke.

We have family that are going to be paying for daycare. They must make 150K. Daycare for one child is similar here as it is in their city, about 1500/month. I guess they have been having problems adjusting to this new expense. I think they are mostly shocked that they have to chose to live a different way. I really refuse to believe that someone making 150K minimally would find a temporary 1500/month bill to be cause them to be "completely broke" for the next decade.

The age of the parents has nothing to do with it--just spending habits.  We were older parents, and daycare was barely a blip in our budget.  Granted, our first daycares were pretty cheap, but we also didn't earn very much.  After babies, we quit eating out and doing stuff because...baby. It kind of netted. I quit buying myself clothes all the time and bought for the baby instead. I didn't really need any more clothes anyway.  Plus, we weren't in the habit of buying the newest and best cell plan, or car, or whatever else.

[Deleted]

I also don't understand why FSAs cannot be changed throughout the year. Not everything goes as planned and you don't necessarily have an event that qualifies as life changing. Both dependent care and health FSAs should be changeable throughout the year, at least within reason (maybe just once). In the past I have been lucky enough to call up my benefits provider and change the dependent care FSA mid year due to some changes that really don't qualify as life change but I am at their mercy.

[Deleted]

Oct 27, 2016 10:55:47 GMT -5 @bunnysmom said:

I also don't understand why FSAs cannot be changed throughout the year. Not everything goes as planned and you don't necessarily have an event that qualifies as life changing. Both dependent care and health FSAs should be changeable throughout the year, at least within reason (maybe just once). In the past I have been lucky enough to call up my benefits provider and change the dependent care FSA mid year due to some changes that really don't qualify as life change but I am at their mercy.

I think it has something to do with the "use it or lose it" part and the fact that it's all available immediately.  The employer is taking a risk that they pay it all and then you quit.  Maybe the risk is higher if someone comes to them in November and says they need to up their FSA from $500 to $2500? 

Dependent care FSA you can't use before it's been funded, and you can change that any time your childcare situation changes.  I've changed mine several times in a year before.

[Deleted]

Oct 27, 2016 11:15:04 GMT -5 minnesotapaintlady said:

Oct 27, 2016 10:55:47 GMT -5 @bunnysmom said:

I also don't understand why FSAs cannot be changed throughout the year. Not everything goes as planned and you don't necessarily have an event that qualifies as life changing. Both dependent care and health FSAs should be changeable throughout the year, at least within reason (maybe just once). In the past I have been lucky enough to call up my benefits provider and change the dependent care FSA mid year due to some changes that really don't qualify as life change but I am at their mercy.

I think it has something to do with the "use it or lose it" part and the fact that it's all available immediately.  The employer is taking a risk that they pay it all and then you quit.  Maybe the risk is higher if someone comes to them in November and says they need to up their FSA from $500 to $2500? 

Dependent care FSA you can't use before it's been funded, and you can change that any time your childcare situation changes.  I've changed mine several times in a year before.

Ok that makes sense about the healthcare FSA. I didn't realize you could change dependent care FSA anytime childcare situation changed. I thought my benefits peeps did me a favor It is not available to change on the benefits website like HSA is so I thought I couldn't. Maybe that depends on the benefits provider?

[Deleted]

Oct 27, 2016 11:20:39 GMT -5 @bunnysmom said:

Oct 27, 2016 11:15:04 GMT -5 minnesotapaintlady said:

I think it has something to do with the "use it or lose it" part and the fact that it's all available immediately.  The employer is taking a risk that they pay it all and then you quit.  Maybe the risk is higher if someone comes to them in November and says they need to up their FSA from $500 to $2500? 

Dependent care FSA you can't use before it's been funded, and you can change that any time your childcare situation changes.  I've changed mine several times in a year before.

Ok that makes sense about the healthcare FSA. I didn't realize you could change dependent care FSA anytime childcare situation changed. I thought my benefits peeps did me a favor It is not available to change on the benefits website like HSA is so I thought I couldn't. Maybe that depends on the benefits provider?

Ours doesn't say anything on the FSA administers site either, I've always just had HR do the change.  But I guess what I'm reading about changing costs of daycare is in our company specific handbook and not the federal rules, so maybe that varies too. 

[quince]

Oct 27, 2016 9:27:06 GMT -5 Lizard Queen said:

Oct 26, 2016 14:19:57 GMT -5 giramomma said:

Didn't read the article.

Higher daycare costs are why it's been better for us to have DH work part time. If we both worked full time, I don't think we could have three kids. We'd likely have to stop at 2 for daycare reasons alone.

I also think that the older the parents are, the more they of their budget is already committed. We were lucky after we got out of school. We kept our standard of living low. We kept our monthly expenses as low as possible. It made it easier to fit in our kid expenses and not feel like we were sacrificing or feel like we were going broke.

We have family that are going to be paying for daycare. They must make 150K. Daycare for one child is similar here as it is in their city, about 1500/month. I guess they have been having problems adjusting to this new expense. I think they are mostly shocked that they have to chose to live a different way. I really refuse to believe that someone making 150K minimally would find a temporary 1500/month bill to be cause them to be "completely broke" for the next decade.

The age of the parents has nothing to do with it--just spending habits.  We were older parents, and daycare was barely a blip in our budget.  Granted, our first daycares were pretty cheap, but we also didn't earn very much.  After babies, we quit eating out and doing stuff because...baby. It kind of netted. I quit buying myself clothes all the time and bought for the baby instead. I didn't really need any more clothes anyway.  Plus, we weren't in the habit of buying the newest and best cell plan, or car, or whatever else.

Agree with this. We aren't young, but we knew that children cost money so started saving well before conception. We have a good buffer and can pay for OPTIONAL daycare so that we both get free time (and more importantly, our son has a social environment which turns out to work very well with his therapies). We also can cover our OOP max annually without too many tears. We live in a VHCOLA so it isn't like we're getting bargain housing/daycare. 

Having tap water tastes on a champagne budget opens up all kinds of options, frankly. It would be easy to be broke if we had prior debt, or liked designer goods, or felt the need to buy new cars, or take luxury vacations, (or travel for fun at all)or MUST HAVE a bedroom for every child. Or, quite frankly, save the max in tax advantaged retirement accounts (hint, if you can save over 20K a year, you aren't broke, you are low on cash because of prioritizing.) It is pretty easy to spend up to your income. Fantastically easy, really, unless you are bringing in millions.

[8 Bit WWBG]

Kind of off topic, but I wonder if, with the rise of craft beer, the saying "champagne tastes on a beer budget" might need to be revisited... just like the child care tax credit.

The point about all the days off is well taken.  It must get very frustrating on snow days and whatnot where lately, it seems like schools close if there is a slight risk of snow.  Fortunately, with the rise of working from home and more flexibility, hopefully parents can make it work.

[tskeeter]

Oct 26, 2016 12:48:59 GMT -5 TheHaitian said:

Read this article this morning :

www.npr.org/2016/10/22/498590650/u-s-parents-are-sweating-and-hustling-to-pay-for-child-care

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.

Now in 2016 with childcare costing about $2,000/month in my area that is barely 3 months.

Should the government increase that amount?

And childcare is one of those things in America where it seems it is easy good to be poor or rich: middle class you are screwed!

In DC for example you are poor you get vouchers for daycare, rent, etc. Rich you can afford it so a non issue... middle class on paper and it is a struggle.

As a non-parent, my answer is no.

Our governments require a certain amount of money to operate.  If you contribute less because you made the choice to raise a family, that means I have to contribute more to help pay the governments bills.

I don't think I should have to subsidize your lifestyle decisions.  Any more than you should have to subsidize mine.

However, if you disagree, and think that subsidizing other people's lifestyle decisions is appropriate, I need new skis and ski boots this year.  And it would be really cool if you would subsidize my decision to ski by sending your contribution.  I'd be happy to cash your check.  

[TheHaitian]

Oct 30, 2016 17:48:38 GMT -5 tskeeter said:

Oct 26, 2016 12:48:59 GMT -5 TheHaitian said:

Read this article this morning :

www.npr.org/2016/10/22/498590650/u-s-parents-are-sweating-and-hustling-to-pay-for-child-care

One thing that it did bring to mind is the child care tax credit: the limit of $5,000/month has been set since 1985 and has never been raised.

Now in 2016 with childcare costing about $2,000/month in my area that is barely 3 months.

Should the government increase that amount?

And childcare is one of those things in America where it seems it is easy good to be poor or rich: middle class you are screwed!

In DC for example you are poor you get vouchers for daycare, rent, etc. Rich you can afford it so a non issue... middle class on paper and it is a struggle.

As a non-parent, my answer is no.

Our governments require a certain amount of money to operate.  If you contribute less because you made the choice to raise a family, that means I have to contribute more to help pay the governments bills.

I don't think I should have to subsidize your lifestyle decisions.  Any more than you should have to subsidize mine.

However, if you disagree, and think that subsidizing other people's lifestyle decisions is appropriate, I need new skis and ski boots this year.  And it would be really cool if you would subsidize my decision to ski by sending your contribution.  I'd be happy to cash your check.  

I believe that is short sighted of you!

In the long run the government and you benefit from having more women in the workforce and contributing $$$ to the government vs being forced to staying home because they cannot afford childcare.

And women in that situation down the road tend to rely even more heavily on the government if their spouse or significant other is no longer in their lives due to illness, death, divorce etc.

I think we as a country can benefit from households where both mom and dad do not feel the pressure of having to choose between career and child rearing and can continue to be taxpaying citizens....

[zibazinski]

Everyone wants what's best for themselves regardless of the cost to anyone else.

[tskeeter]

Oct 30, 2016 19:08:50 GMT -5 TheHaitian said:

Oct 30, 2016 17:48:38 GMT -5 tskeeter said:

As a non-parent, my answer is no.

Our governments require a certain amount of money to operate.  If you contribute less because you made the choice to raise a family, that means I have to contribute more to help pay the governments bills.

I don't think I should have to subsidize your lifestyle decisions.  Any more than you should have to subsidize mine.

However, if you disagree, and think that subsidizing other people's lifestyle decisions is appropriate, I need new skis and ski boots this year.  And it would be really cool if you would subsidize my decision to ski by sending your contribution.  I'd be happy to cash your check.  

I believe that is short sighted of you!

In the long run the government and you benefit from having more women in the workforce and contributing $$$ to the government vs being forced to staying home because they cannot afford childcare.

And women in that situation down the road tend to rely even more heavily on the government if their spouse or significant other is no longer in their lives due to illness, death, divorce etc.

I think we as a country can benefit from households where both mom and dad do not feel the pressure of having to choose between career and child rearing and can continue to be taxpaying citizens....

Carl, I'm all for women in the workforce.  My DW is one of them.  But, I wonder if couples would make different choices about the size of their family if they had to shoulder all of the financial responsibility of becoming parents, as my parents did.  Remember, tax breaks for parents, such as the dependent deduction, childcare credits, education credits, and the like, are relatively new additions to the tax code.