IRS spotlights IRS Employer-Provided Childcare Tax Credit

The Internal Revenue Service has posted a new page on IRS.gov explaining the Employer-Provided Childcare Tax Credit to provide more information about the tax break.

The tax credit helps employers cover some of the costs for qualified child care facilities and resources and referral expenditures associated with offering child care services to workers. A qualified child care facility needs to meet the requirements of all the laws and regulations of the state and local government in which it’s located. The credit is limited to $150,000 per year to offset 25% of qualified child care facility expenditures and 10% of qualified child care resource and referral expenditures.

“This business tax credit helps employers provide their employees with child-care services and facilities,” said IRS Commissioner Danny Werfel in a statement Wednesday. “We’ve heard that some employers may be overlooking this important credit, so the IRS has created a new one-stop shop for information on IRS.gov that provides an easy place to learn more.”

The information is available at irs.gov/employerchildcare or by searching “employer child care” on IRS.gov.

Employers need to fill out Form 8882, Credit for Employer-Provided Child Care Facilities and Services, to claim the credit. It’s part of the general business credit that’s subject to the carryback and carryforward rule, so employers can carry back an unused credit one year and then carry it forward 20 years after the year of the credit. Taxpayers whose only source for the credit comes from pass-through entities can report the credit directly on Form 3800, General Business Credit.

The Employer-Provided Childcare Tax Credit page contains more details about claiming the credit, including the requirements for qualified child care expenditures and qualified child care facilities.