How To Provide An Employee With A Child Care Payment?

Childcare stipends can be offered as standalone perks, on-site daycare, or part of broader employee benefits like dependent care FSA (flexible spending account). These benefits help employees manage the demands of working and parenting, solving three core problems: finding care, paying for childcare, and avoiding flexible work schedules. Employers can provide child care subsidies during the pandemic, typically through employer-provided spending. The Employer-Provided Child Care Credit can save employers with eligible expenses more in taxes than using a deduction alone, and employees can exclude childcare expenses.

To offer top childcare benefits, employers can offer onsite child care, partner with community child care providers, offer cost-sharing or reimbursement plans, or offer back-up care through big daycare providers like KinderCare, Bright Horizons, or The Learning. Child care benefits have risen in popularity since the pandemic, with 56 of them offering support for their children during the workday. To design a child care benefits package that employees will love, employers should set goals for their childcare policy, consider their employees’ needs, and consider their needs.

Employer-supported childcare is usually provided through salary sacrifice, where employees arrange backup childcare of their choice and submit receipts to the employer for reimbursement. A childcare stipend is a fixed sum of money employees can use to cover childcare expenses, from nanny services and daycare centers to summer. Dependent care flexible spending accounts (DCFSA) are pretax benefits that employees use to pay for eligible adult or childcare expenses.

Employers can contribute up to $5,000 a year to the cost of each employee’s child care without the subsidy being added to their taxable income. They can also offer childcare subsidies, such as daycare tuition reimbursement, to financially support employees struggling to cover childcare costs.