WASHINGTON, D.C. — In a bid to encourage more businesses to provide child care services for their employees, the Internal Revenue Service (IRS) has launched a new page on its official website. The newly introduced page offers comprehensive information about the Employer-Provided Childcare Tax Credit.
“This business tax credit assists employers in offering child-care services and facilities to their employees,” IRS Commissioner Danny Werfel stated. He added, “We’re aware that some employers might be missing out on this significant credit, so we’ve established a new one-stop information hub on IRS.gov to make it easier to learn more.”
The Employer-Provided Childcare Tax Credit is designed to help employers defray some of the costs associated with providing child care services to their employees. To qualify, a child care facility must meet all applicable laws and regulations of the state or local government where it is located.
The tax credit, capped at $150,000 per year, offsets 25% of qualified child care facility expenses and 10% of qualified child care resource and referral expenses.
To claim the credit, employers should complete Form 8882, Credit for Employer-Provided Child Care Facilities and Services. This credit is part of the general business credit and is subject to the carryback and carryforward rule. This means employers may carry back unused credit one year and then carry forward 20 years after the year of the credit. Taxpayers whose only source for the credit is from pass-through entities can report the credit directly on Form 3800, General Business Credit.
The IRS hopes that the new resource will increase awareness of the tax credit and help more businesses understand how they can benefit from providing child care services to their employees.
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