Childcare is a critical component of alleviating the worker shortage crisis. Childcare is also one of the key components of the Emporia Area Chamber of Commerce Ignite Emporia platform. Following are four things employers can do right now to help their employees access childcare, as well as information on relevant tax credits and benefits options.
- Research existing childcare options in the community and provide a childcare directory for employees. Contact organizations that specialize in Kansas childcare to identify various types of quality care in your community. Include traditional childcare centers and home daycare, non-profit and faith-based providers, as well as Head Start and Early Head Start programs for eligible families.
- Contract with a third-party organization to help employees connect with childcare providers. A third-party company can facilitate services that provide tangible assistance to employees for their dependent care needs. A back-up program in which your business establishes a relationship with a specific provider could ensure childcare should an employee’s usual arrangement be disrupted. A third-party company can set up and manage an employer subsidy program to help defray childcare costs with vouchers. And lastly, arranged partnerships with specific childcare providers can provide access to reserved spots specifically for your company’s employees, sometimes at negotiated special rates.
Did you know that employers can recoup some of the cost of third-party intermediaries via tax credits? Employers can claim 10% of costs associated with a third-party referral service contract. It would also be worth the time to learn more about the Employer-Provided Child Care Tax Credit at https://www.gao.gov/products/gao-22-105264.
- Offer a Dependent Care Flexible Spending Account (DCFSA) to eligible employees. This is a pre-tax benefit account that workers can use to pay for eligible dependent care services. Like a Flexible Spending Account for healthcare, the DCFSA funds are withdrawn from the employee’s paycheck before taxes are deducted, reducing the employee’s overall tax burden. At the end of the year, DCFSA contributors submit receipts and are reimbursed for eligible expenses, up to $5,000.
- Educate employees about their tax options. Do your employees know that they can claim childcare expenses? One option is the Child & Dependent Care Tax Credit. This tax credit helps parents and families pay for care of their children and other dependents while they work, are looking for work, or are attending school. Requirements for claiming the CDCTC specify that childcare must be for dependent children under the age of 13 and that childcare is needed because both caregivers work, are looking for work, or are attending school full-time. In addition, Kansas (along with 24 other states) offers state Dependent Care Tax Credits. You can learn more at https://www.ced.org/child-care-state-tax-credits.
Childcare–both how to find it and how to pay for it–will continue to be a difficult issue. However, there are ways for both employers and employees to create a more accessible and affordable situation if everyone can work together. Contact Chamber President and CEO Jeanine McKenna for more information about local childcare initiatives and resources.
It’s a great day in Emporia!
“Let’s Talk Business” is a weekly column of the Emporia Area Chamber of Commerce and Visit Emporia. The mission of the Chamber is to be proactive in creating an environment for business and community success, guided by the vision that positive attitudes promote positive actions. Contact us at 620-342-1600 or firstname.lastname@example.org and visit our website at www.emporiakschamber.org.