Childcare
costs vary quite a bit throughout United States. The Children's Defense Fund
states that full time child care in Texas would cost around $4200 a year,
whereas if you were in Boston you would be paying as much as $9000 a year.
Child care is probably your biggest expense if your child is not in school
yet. Private nannies may cost anywhere from $2000 to $5000 a month. Day care
centers aren't cheap either. A preschooler would be charged at least $5 an
hour.
There is no denying that childcare costs are
huge. However, if you do your homework well, you may be able to achieve substantial
savings.
Here are some tips to help reduce childcare
costs:
- Always shop around before deciding on a
daycare center or private nanny. Ask parents in your neighborhood as well
as workplace.
- Approach childcare associations. These may
help you save a lot of money.
- Avail all tax benefits, especially the Child
Tax Credit. This entitles you to a $500 tax credit for every child below
17 years of age. It's available for taxpayers with an adjusted gross income
of $75,000 or less who file a single return. The credit is reduced by $50
for each $1,000 or fraction above those amounts. Ensure that you keep track
of all your childcare costs and save receipts. Besides this, there are other
deductions that may be useful. For more information visit the IRS website
at http://www.irs.gov
- You may also want to check out the Flexible
Spending plan. This plan allows you to deduct the costs of childcare (as
much as $5,000 a year per household) from your pretax income, thereby lowering
your taxable earnings. Depending on your income level this plan, usually
offered by your company, may yield more benefits than the Tax credit. However,
you can chose only one option, so chose wisely.
- If you put your child in a daycare center
ensure that you get there on time. Daycare centers charge exorbitant amounts
of money if a parent is late. Coordinate your schedule with your partner
so your child can be dropped off later or picked up earlier. Anticipate
traffic and be on time (or early) for pickup.
- Split the cost of a nanny or au pair with
friends or neighbors who have children. This may save you considerable amount
of money. You would be better off swapping with friends, neighbors, or co-workers
with children for short time periods.
Copyright 2001, 2004. All rights reserved. Any reproduction
of this article in whole or in part without written or verbal permission is
strictly prohibited. For information about reprinting this article, contact
the copyright owner: Vanessa Rasmussen, Ph.D, Starting a Day Care Center, http://www.startingadaycarecenter.com.
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