Using a child care calculator can help you understand the long-term financial implications of child care. The cost of child care has skyrocketed in recent years, and the time taken to care for children can affect a family’s financial future. There are also tax credits available to help pay for child care.
Cost of child care has skyrocketed in recent years
In recent years, child care costs have increased much faster than the cost of other consumer goods. Between 1990 and 2011, the average cost of child care rose 40 percent, more than twice the rate of overall inflation. In California alone, a typical daycare center costs almost half a single mother’s income.
According to a 2014 study, the cost of child care in the U.S. has risen by 50% in the past five years. In fact, the average price of child care in Washington, D.C. is $19,214, which is more than double the average cost of in-state college tuition. These high costs have made paid child care out of reach for many lower-income families. It is estimated that only one-fourth of families with children under five will be able to afford it by 2020, according to the Committee for Economic Development.
Child care costs vary by state, and are often determined by the state’s average earnings and regulations. A recent study found that raising the average child care worker’s pay to the same level as that of a kindergarten teacher would result in an additional twelve to twenty seven percent price increase for families. While this would represent a one-time bump in prices, it would also serve as a “floor” from which future prices will rise.
Impact of taking time off from work on families’ financial futures
Taking time off from work can put a strain on the family’s finances. Those with lower incomes are more likely to use their savings, borrow, or limit spending to cover leave costs. They are also more likely to apply for public assistance. Young adults are also less likely to have access to paid leave, and they are more likely to have a high student loan debt burden. Furthermore, they often do not have much saved up for unexpected emergencies.
When women are on leave without pay, they are more likely to cut back on basic necessities, borrow money, or put off paying bills until they are back at work. Men on leave without pay are more likely to spend less than women, so they tend to save more money for necessities. However, the impact on families’ financial futures varies according to whether the leave was taken for a family crisis or for a personal need.
Tax credits available to help pay for child care
There are a number of tax credits available to help you pay for child care. One such credit is the Child and Dependent Care Credit. The Child Care Subsidy (CCS) is a government payment. You can claim this credit if you have a child or dependent who needs a caregiver while you are at work. This credit is based on your adjusted gross income and child care expenses that you have incurred while at work. Another credit is the earned income tax credit, which is available to working families with moderate to low incomes. This tax credit is refundable and is available until 2021.
There are a number of ways to qualify for this tax credit. While detailed information is not readily available, some companies have used it to offset their child care expenses. Employers can also use the credit to help their employees pay for the child care expenses. Many states have childcare networks. These organizations serve the community by helping families find quality childcare. Some may even be non-profit or faith-based.
