Free Government Daycare, or Tax Write-off? The IRS Decides For You
This is a quick blog, so please forgive my ‘ungreat’ writing skills
Being a single mother who makes very little money, I qualify for every government program imaginable. Prior to my ‘re-education’ of the founding of America and her principles, I received these freebies (ie- daycare, medical, foodstamps, wic).
After attending a tax day tea party in April, I realized I am a hypocrite. After 9 years, I was no longer ‘taking a hand up’, I was ‘taking a hand out’. I ended my rendezvous with government programs.
A tax credit exists for out of pocket childcare. I’ve paid $3000 this year for childcare. I am in the lowest tax bracket. Using an online tax-estimator, I was astonished to find I WILL NOT RECEIVE A DIME for out of pocket childcare. Had I made $8k more (and fell in the next tax bracket), I would receive a credit of 65% of my out of pocket childcare expenses, but would not have qualified for subsidized daycare.
Federally subsidized daycare works like this: A voucher is mailed and given to the childcare provider. Income guidelines require a monthly co-pay. In Ohio, full time childcare runs about $500 a month. My co-pay was $165 per month for one child. Therefore I paid about 35% of daycare expenses out of pocket.
Do you see the irony in this situation?
The moral of the story is, if you’re relatively poor, you cannot receive credits for stuff you qualify for with federal programs. It seems as though ‘Joe the plumber’ was on to something even more sinister than most of us can ever imagine.