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Determine Eligibility for Employer-Provided Childcare Tax Credit




The Internal Revenue Service (IRS) has introduced a new section on its website dedicated to clarifying the Employer-Provided Childcare Tax Credit, an initiative encouraging businesses to offer childcare services to their workforce.


Details can be found at IRS.gov/employerchildcare or by using the search term "employer child care."


The tax credit aims to assist employers in defraying expenses related to qualified childcare facilities, resources, and referral expenditures linked to providing childcare services to their employees. A qualified childcare facility must adhere to all applicable state or local government laws and regulations.


The credit is capped at $150,000 annually, covering 25% of qualified childcare facility expenses and 10% of qualified childcare resource and referral expenditures.


To claim the credit for qualified childcare facility and resource and referral expenditures, employers need to fill out Form 8882, Credit for Employer-Provided Child Care Facilities and Services. The credit falls under the general business credit and follows the carryback and carryforward rule, allowing employers to carry back unused credits for one year and carry forward for up to 20 years from the credit year. For taxpayers receiving the credit solely from pass-through entities, reporting it directly on Form 3800, General Business Credit, is permissible.


For comprehensive information on claiming the credit, including details on qualified childcare expenditures and facilities, visit the Employer-Provided Childcare Tax Credit homepage.


 

Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.

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