If your employer provides child care services as a benefit, you may be eligible for the employer-provided child care tax benefit, but not the Child and Dependent Care Tax Credit.
Some workplaces offer child care services or monetary benefits that they can then use to help lower their tax bill. If you’re an employee who receives access to employer-sponsored or discounted child care, you may be able to lower your taxable income when filing your taxes.
With this tax break, you can deduct up to $5,000 in child care expenses from your taxable income. This means if you made $45,000 in 2022, your taxable income could be lowered to $40,000, placing you in a lower tax bracket, and reducing your tax bill.
If your child care expenses for the year equal $5,000 or less, then you cannot also claim the Child and Dependent Care Tax Credit. However, if your expenses are higher, you may be able to claim both, as long as you’re claiming different expenses for these tax breaks. For instance, if you pay for supplemental child care services while working or for a child who may not qualify for your workplace child care center, then you may be able to claim both credits.