The IRS made significant revisions to the tax rules for the next year last Friday. Employee contributions to retirement and flexible health spending accounts, which allow you to pay for medical bills with pre-tax cash, will be increased in 2023. Making child care an actual, tax-deductible work expense would have significantly impacted working parents, but the agency chose not to implement this reform. Currently, if employees go out to dinner and drinks with clients after work, they may claim the bill as a valid work expenditure to the employer as long as it isn’t, in the IRS’s ill-defined description, “lavish or excessive,” given the circumstances. The babysitter’s cost, however, is not tax deductible if a mother needs to hire one to attend a client dinner. The IRS states that “personal, living, or family costs are normally not deductible.” This is reprehensible. Parents nowadays are under even greater financial stress due to increasing inflation, and for many families, every dollar matters. Therefore, child care costs incurred to work should be regarded as a tax-deductible expense. Additionally, if someone hires child care to participate in work-related activities outside of regular business hours, such as business trips or dinners with coworkers, their employers should compensate us for the cost and be able to deduct it from their taxes. The child and dependent tax credit enable many parents to deduct up to 50% of their child care costs with a cap of $8,000 for one kid or $16,000 for two or more children. (A deduction lowers the portion of a person’s taxable income, whereas a credit reduces the amount of taxes a person or household owes.) That credit, though, wouldn’t be nearly enough for most parents. The average cost of child care in the US was more than $10,000 in 2020, with wide geographic variation, according to Child Care Aware of America. This nonprofit organization promotes high-quality, low-cost child care. “I, for one, spend far more than $10,000 per year on each of my kids’ preschool expenses,” says Kara Alaimo, associate professor at Hofstra University. Additionally, the IRS permits businesses to provide employees with dependent care flexible spending accounts, allowing for an annual deduction from their paychecks of up to $5,000 for child care costs. Taxes are not due on this money, although the exemption amount is absurd. In addition to the cost of a full-time nanny or daycare facility, hiring babysitters for work-related occasions adds another expenditure. “And the cost is high.” High school students in my community in the Northeast are already charging more per hour than I make in my full-time job as a professor (after taxes and benefit deductions). “However, I have three doctoral degrees and two decades of professional experience,” Kara added. According to a recent Wall Street Journal article, some teens are already charging $30 per hour to watch children, and they are successful because parents are desperate for help. So, for parents, paying for child care to attend a business function is a significant expenditure that their employers should cover. In the opinion of the author and feminist activist Caroline Criado Perez, the IRS and employers’ indifference to these costs is proof of gender prejudice. She claims in her book, “Invisible Women: Data Prejudice in a World Designed for Men,” The implicit bias is clear: cost codes are predicated on the assumption that the employee has a wife at home taking care of the home and the kids.” Because it is women’s labor and they are not compensated for it, there is no need to pay. However, most parents in today’s societyâ€â€regardless of genderâ€â€work. It’s time for the IRS to update its outdated regulations and recognize child care as a legitimate, tax-deductible expense required for parents to work. Employers also need to understand that when they invite staff to steak dinners in the name of employee appreciation, they ask parents to incur a sizable expense.
Contact Information:
Email: [email protected]
Phone: 6023128944
Bio:
Mike was born in Chicago, Illinois on August 13, 1946. He was brought up in thesuburb of Skokie on Chicago’s northwest side and graduated from Niles Township (East ) high school In 1964. Two years later he joined the US Air Force in November of 1966. After 2 years of Intense training he volunteered for Viet Nam and was sent toBien Hoa Airbase, which was 25 miles from Saigon, the nation’s capital. He volunteered for a number of especially dangerous missions on his days off, such as flying as a door gunner on a US Army helicopter and as a technical assistant on a psychological operation on an Air Force O-1E observation aircraft. Capping off his impressive accomplishments was winning the coveted Base Airman of the Month for March 1969, a feat which was featured in the Pacific Stars And Stripes newspaper read by every service man stationed in the Pacific theater of operations. After hisViet Nam tour of duty he was stationed at Luke Air Force Base in Glendale, Arizonawhere he met and married his wife, Lequita.He graduated from Arizona State University in May, 1973, and after a 30-plus year career as a financial advisor he joined a number of service organizations including Easter Seals and Valley Forward, sponsor of EarthFest. He was also involved with the National Federation of Independent Business and became the longest-serving chairman of the Leadership Committee ever. He spoke before the ( AZ ) House Waysand Means & Senate Finance committees. He then joined Disabled American Veterans ( DAV ) in September of 2015. He rose quickly through the ranks and became Chapter 8 Commander in May of 2019 where he served with Distinction for 3years before being “ termed outâ€. The next year, as Vice Commander, he won the title of National Champion Recruiter!
