Tell me about childcare costs and taxes please.... specifically Indiana?!

dunvilles · July 2014

We have an in home daycare option right now and LOVE her. She is a SAHM and watches my two boys full time. She does not turn it in on taxes, and is higher than most in home providers. When we started she took the kids to the library, playground, etc. Now, we're having to make lots of exceptions for her. For example: last min. doctors appointments (need to pick kids up early), last minute days off (have to find alternate care), taking her child to preschool this fall (DH has to go into work 1.5 hrs late and work until 7pm to accomodate this.) etc... etc...

We have a "baby utopia" here that is affiliated with DH's work. AWESOME state of the art facility. Excellent program. etc. BUT it is SO expensive! We would have to pay year round even though I am a teacher and have 14 weeks off a year (including holidays).

Wondering if being able to turn in the costs on taxes will make much of a difference taxes wise? Any ideas ladies?

1.) In home + preschool= $1200/month (9 months) can not take off on taxes ($10,800/year)

2.) Baby Utopia (preschool included)- $1708/month (12 months) can take off on taxes ($20,496/year)

ETA- updated cost #'s and spoke with our accountant. Can take $1200 deduction off taxes for option two.

SuzyQq02 · July 2014

A lot will depend on your income. There's a dependent care tax credit that can be worth up to $3k per year per kid (capped out at $6k for 2 kids), but what percentage of costs you can claim is income dependent. That's a CREDIT, which comes right off the amount you pay in taxes.

There's also a dependent care FSA account, which may be offered through your employer. That lets you put aside money tax free (up to $5k) to pay childcare expenses, which brings down your overall taxable income. Again, what impact that has will be largely dependent on your income and where shaving that $5k off the top affects you tax bracket wise.

futuremrswinfree · July 2014

Holy crap! That is really expensive! I thought $1200/ month (what we are about to pay) was high! I'm pretty sure the deduction is 20% and there is a max amount. Doubtful the extra $ a year in daycare expense would be worth the possible 6k deduction, however, knowing that you don't have to make those exceptions may be. It just depends on your family's needs vs. finances.

dunvilles · July 2014

@suzyQq02 Thank you for the info!!! Do you know if the dependent care FSA accounts can be used to pay an in home provider that doesn't claim the income on taxes? May be a totally dumb question...

@futuremrswinfree yes.... SO expensive!!!

JackieP1023 · July 2014

This makes me glad that I have a flexible part time job. We only pay ~$200/month for care (because most of the time either DH or I am able to stay home).

dunvilles · July 2014

JackieP1023 said:

This makes me glad that I have a flexible part time job. We only pay ~$200/month for care (because most of the time either DH or I am able to stay home).

You are SO lucky!!!!

We will feel so wealthy after our kids are out of preschool/daycare. :P (not really, but it will feel amazing not having that money go towards child care!)

Our monthly daycare costs are more than our mortgage payment :P

coralreefmom · July 2014

dunvilles said:
@suzyQq02 Thank you for the info!!! Do you know if the dependent care FSA accounts can be used to pay an in home provider that doesn't claim the income on taxes? May be a totally dumb question...

@futuremrswinfree yes.... SO expensive!!!

I highly doubt that you could use the FSA for your care right now. Mainly because she doesn't report it as income

SuzyQq02 · July 2014

cyclonewxchick said:

@suzyQq02 Thank you for the info!!! Do you know if the dependent care FSA accounts can be used to pay an in home provider that doesn't claim the income on taxes? May be a totally dumb question...

@futuremrswinfree yes.... SO expensive!!!
I highly doubt that you could use the FSA for your care right now. Mainly because she doesn't report it as income

Cyclone is correct. To use FSA funds, she would need a tax ID and to sign a form saying that's what you're paying her for. If she isn't reporting the income, she wouldn't do that. ;-)

JackieP1023 · July 2014

dunvilles said:

JackieP1023 said:

This makes me glad that I have a flexible part time job. We only pay ~$200/month for care (because most of the time either DH or I am able to stay home).

You are SO lucky!!!!

We will feel so wealthy after our kids are out of preschool/daycare. :P (not really, but it will feel amazing not having that money go towards child care!)

Our monthly daycare costs are more than our mortgage payment :P

Our neighbors actually said the same thing! They have a 4 year old and a 1 year old, and they pay more than their mortgage in full time childcare. That is insane! Although it will feel amazing when you have all of that money 'free'!

dunvilles · July 2014

Thanks for the info ladies... over the course of your answers, speaking with my accountant, and crunching the numbers, I have answered my own question. Looks like in-home option with some inconveniences....

versed · July 2014

Tell me about it ... The daycare we just fell in love with will be more than double our monthly mortgage payment if we go that route. Boo.

ETA: sorry I'm no help to OP

dunvilles · July 2014

vshumway said:

versed said:

Tell me about it ... The daycare we just fell in love with will be more than double our monthly mortgage payment if we go that route. Boo. ETA: sorry I'm no help to OP

I'm jealous that you all have such low mortgage payments! Our mortgage for a townhouse is more than OPs baby utopia!

Also no help to OP, then to state that if you really like her, then it might be worth the inconveniences.

Mortgage payments/daycare costs vary greatly depending upon where you live. In rural Indiana, these costs are quite expensive for the area. Especially the "baby utopia".

keags5496 · July 2014

dunvilles said:
Thanks for the info ladies... over the course of your answers, speaking with my accountant, and crunching the numbers, I have answered my own question. Looks like in-home option with some inconveniences....

Could you find a licenses in home provider? That's what we use and her costs are lower than a center but she still reports taxes.

Want a personalized experience?

Tell me about childcare costs and taxes please.... specifically Indiana?!

Re: Tell me about childcare costs and taxes please.... specifically Indiana?!

Choose Another Board

Search Boards