I knew about the higher taxes before my move. I also knew that I would have higher expenses here on the East coast. As a single mom, I spend almost $10,000 a year here for child care (almost DOUBLE what I spent in Colorado). Still, I didn’t think too much of it – especially since I believed the child care credit would help curb those expenses.

But no, those deductible expenses are capped at $3,000. It isn’t just the Dependent Care Credit. I don’t even qualify for the Earned Income Credit that my income would’ve allowed me to claim in Colorado.

Since $3,000 is the cap on deductible expenses for the Dependent Care Credit, coupled with the lower cost of living and taxation in Colorado, moving here was -scarily- a poor financial decision.

I made this move with the intent of raising my (and my daughter’s) standard of living. In this country, we are taught that working hard and making honest money would be rewarded. It is sad and frustrating to find yourself in a situation where you find yourself making 50% more money and subsequently finding out that those extra hours spent at the office didn’t benefit your wallet.

WHY does the government cap those deductible expenses at such a LOW number? I don’t want a handout, but come on – this benefits nobody. I agree with taxgirl. It doesn’t benefit the lower-class, middle-class, nor upper-class. We ALL spend a great bundle of money on child care. I work hard.

We should get more women into Congress. Our government should do more to encourage hard work and diligence.

I’m on the other end of the income. Made under 13000 in 2009, and under 14000, in 2010. I am not on any kind of welfare program. In 2009, I was out of a job for 3 months. I lived off my savings and having no other family here, I had to pay a lot for childcare so I could look for work. I finally found one, part time. It required a lot of driving and we were reimbursed mileage and time. I don’t have to tell you what that can do to your car, beside which they made me carry more auto insurance coverage than I wanted or needed. During the holidays, I was employed as a casual worker at USPS. Didn’t get paid for the 3-4 weeks that we worked until the next year 2010. I almost had a heart attack when I found out that all my efforts were in vain. Bottom line: I did not make enough money. I spent more money for childcare than I earned at the part time job I got for the remaining 9 months of the year. We all know what 2010 was like in the job market. Even getting a full time job , the last 2 months of the year did not help. It killed me to have the taxes taken off from my check, but it still did not help.

What exactly are we supposed to do? Is there a way to show these people in congress that something needs to be done. Whether the care is private or daycare center, etc. it is still money paid, expenses accrued. High income or low income, there’s no win. Taxgirl’s right. We struggled to use the little we had to keep the economy moving. We patronized those business so we wouldn’t have to ask for help from Uncle Sam and, in my case Uncle Ricky.These business paid taxes to the government. Something needs to be done. If there is a movement or petition addressing this issue, please let me know. Right now I’m feeling too sick to the stomach again because of this.

And you claim we want Uncle Sam to pay for our child care, but you are dead wrong. I have no problem paying for child care, but why should we have to pay taxes on the amount we have to pay? It’s not like this is a luxury we are trying to deduct here. Really it’s a business expense, because we have to pay for child care in order to go to work! We are just trying to make ends meet here.

We pay about $16,500/year to have just 2 kids in daycare. My wife makes about $32,000/year. So over half of her gross pay goes to daycare. Take out taxes and it’s about $26,000/year or $2166/month even with the tax credit allowance. Then take out daycare and it’s $9500/year or $792/month to take home. It’s not much, but we need it.

And remember people, we don’t get $6000, we only get a percentage of that, around $1500, deducted from our taxes. I/12t isn’t free money from the government!

Basically, my wife works hard 40 hours a week to bring home $800/month after taxes and child care. If we could deduct the entire $16,500 instead of just $6000, we could keep another $200/month. We aren’t looking for a handout, just to keep a little more of our hard earned money. Stop taxing child care!

P.S. To magpie: If you have a dependent care flex account, you can still take the credit, but you have to subract the $5000 you contibuted tax free to the account from the $6000, meaning you can claim a $1000 allowance for the credit. I don’t know why they just don’t allow you to contribute $6000 to the account! That’s Congress and the IRS for you!

Prior to this credit, most home-based care providers could earn $20-40K/year or more under the table. Not only not paying taxes on it, but also maintaining eligibility for assistance like food stamps, WIC, earned income credit, medicaid, etc. So it’s a bigger issue than just making sure the IRS gets its due.

Here’s one thing I can guarantee. The day the government increases the Child Care Credit you’ll see an increase in the Day Care prices almost proportionate.

The same thing happens with student loans. The feds increase the programs, schools see an opportunity to jack up tuition.

I have a client who earned $90,000 last year and paid no federal income tax; yet another had a liability of $8,0000, is it fair to have that disparity based on life choices?