Employer-Provided Childcare Tax Credit: An Overlooked Incentive

Last week, the IRS released a reminder about the often-overlooked employer-provided child care tax credit. The credit is available under IRC Section 45F and is designed to encourage business owners to provide childcare services to their employees. Employers who provide qualified childcare facilities can receive a credit of up to $150,000 to offset 25% of the expenses associated with that facility. A qualified childcare facility is defined to include facilities that meet the requirements of all applicable state and local laws based on the facility's location. To claim the credit, employers complete Form 8882, Credit for Employer-Provided Child Care Facilities and Services. The credit itself is part of the general business credit and is subject to the generally applicable carryback and carryforward rules (i.e., employers can carryback unused credits for one year and carryforward for 20 years after the year in which the credit is claimed). For more information on the general business tax credit, visit Tax Facts Online. : Q 758.