Gillibrand wants to offer relief for high child care costs
U.S. Senator Kirsten Gillibrand is hoping to ease the burden of the high cost of child care for families.
Gillbrand appeared at the Family Help Center on Dingens Street in Buffalo Friday afternoon announcing bipartisan legislation to more than double Dependent & Child Care Tax Credit.http://youtu.be/ScGZlG7QzK0
"Child care in our state of New York is very expensive. It rivals the cost of attending a SUNY school," stated Gillibrand. "
"Child care in our state of New York is very expensive. It rivals the cost of attending a SUNY school," stated Gillibrand."Last year New York was ranked as the second least affordable state in the country for child care. This year, we've dropped to first place."
Gillbrand said it is time the federal government allows the cost to be treated as a business expense for parents. "Here in Buffalo, the average family make a little more than $30,000 a year, but the annual cost of child care is over $10,000," said Gillibrand.
Kimberly Pardee, a Buffalo area parent, appeared at Gillibrand's news conference. She told reporters the cost of day care is a 'struggle'. "It is an everyday stressor in my life and my husband's. We are pretty much hanging on by the skin of our teeth right now," said Pardee.
Expanding the Dependent and Child Care Tax Credit (DCTC)
Senator Gillibrand is working to more than double the Dependent and Child Care Tax Credit (DCTC). Currently, the child and dependent care tax credit is worth a maximum of 35% of child care expenses, up to $1,050 per child or $2,100 for two children. The credit applies to any child under the age of 13 and to disabled dependents of any age. The Right Start Child Care and Education Act would increase the maximum credit from $1,050 to $3,000 per child, by raising the percentage of the tax credit to 50% and doubling eligible expenses. The legislation also makes the tax credit fully refundable, allowing low-income families with no tax liability to receive the full benefit.
For example, under current law, a New York family with two children earning $30,000 a year, receives a credit of $1,620 ($810 per child). Under the Gillibrand proposal, which would make the tax credit refundable, the same family with two children could receive a maximum credit of $6,000 ($3,000 per child).
This legislation would also encourage more New York businesses to provide on-site child care services for their employees by providing employers with a tax deduction worth 35 percent of the cost of creating these facilities. Currently, employers can only deduct 25 percent of their costs.
The following explains how the proposed legislation would assist families if approved.:
Creating a New Child Care Tax Deduction
Senator Gillibrand will introduce the Child Care Deduction, which would allow middle-class families to deduct the cost of child care from their taxes as a business expense. The legislation would create a new tax deduction, allowing families to deduct as much as $14,000 a year for child care expenses ($7,000 for one child).
Families would have the option of choosing an above-the-line deduction to help mitigate the high cost of child care. After all, child care expenses are necessary, non-optional costs to families with working parents that cannot forfeit needed wages.
For example, under current law, a family with two children earning $100,000 can receive a maximum credit of $1,200. Under the Gillibrand proposal, this family spending $14,000 a year on child care expenses could deduct the full amount, therefore, lowering their taxable income by $3,500.
Child and Dependent Care FSA Enhancement Act
Senator Gillibrand will introduce the Child and Dependent Care FSA Enhancement Act, which would increase the amount of money not subject to taxes that families can contribute to a flexible spending account used to pay for child care expenses. Gillibrand’s new legislation would increase the pre-tax contribution level from the current $5,000 to $7,500, saving New York families hundreds of dollars on child care.
For example, under current law a married couple making $80,000 will save $1,250 in Federal Taxes (25 percent of $5,000) if one parent contributes $5,000 to a dependent-care FSA account. Under Gillibrand’s new proposal, the same couple will save $1,875 in Federal Taxes (25 percent of $7,500) if one parent contributes $7,500 to a dependent-care FSA account.