The Child Care Deduction is a Joke

It is tax time, or soon will be. One of the major deductions we have is the cost of child care. Specifically, we have a dependent care reimbursement account, which is a pre-tax deduction from pay that then can be used to pay for child care. This is certainly helpful. The thing is, the total limit for the year is a joke. It hasn't been raised in ages. It hasn't kept up with inflation. It hasn't kept up with anything.

Right now, with two kids, in a cheap day care, our day care costs are about $341 per week. With a nanny we paid over $500 per week. That comes to either $17,700 per year or $26,000 per year. And the limit on a child care dependent reimbursement account for the year? $5,000. As I said, it is a joke. Especially since the costs of child care in my area are probably rock-bottom compared to many other areas of the country. And this is with only two kids. You have many families with more kids. That $5,000 amount is a flat rate, regardless of the number of kids you have.

This really needs to be increased. In fact, an increase is ridiculously overdue. Unfortunately, I don't see an increase on the horizon. I'd say write your congress person, but I don't think three letters will do it.