CandleFocus Glossary Editor
Dependent care benefits are a type of employee benefit that provides support to those who are responsible for the care of their dependents. This can include elderly parents, those with physical or mental disabilities, and those who need daycare services for young children. As part of a comprehensive employee benefits package, dependent care benefits can offer financial assistance and other support that make caring for dependents more affordable and sustainable.
The primary benefit provided to eligible taxpayers is the Child and Dependent Care Tax Credit. This allows taxpayers to claim a credit of up to 35% of their eligible dependent care expenses, up to a maximum of $3,000 for one dependent or $6,000 for two or more dependents. This can provide a significant reduction in the cost of dependant care and incentivize employers to offer benefits to their employees who care for dependents.
In addition to the tax credit, employers may offer other dependent care benefits such as flexible spending accounts (FSAs). With an FSA, employees can allocate a portion of their pay to be put into a special account to later be reimbursed for qualifying out-of-pocket dependent care expenses. This is convenient as it allows employees to save as they go and have more cash on hand if and when they need it.
Also, paid leave is another benefit available to certain employees, such as those covered by the Family and Medical Leave Act (FMLA) and those who are state or local government workers or teachers. Paid leave allows employees who need to step away from work due to caring for a dependent the opportunity to still receive wages, helping to offset any lost income or expenses incurred while caring for their dependent.
In many instances, providing dependent care assistance can make the difference between being able to keep or leave a job and can provide peace of mind to employees. As part of an employer’s overall compensation package and a way to attract and retain valued team members, dependent care benefits are a necessity for many employers.
The primary benefit provided to eligible taxpayers is the Child and Dependent Care Tax Credit. This allows taxpayers to claim a credit of up to 35% of their eligible dependent care expenses, up to a maximum of $3,000 for one dependent or $6,000 for two or more dependents. This can provide a significant reduction in the cost of dependant care and incentivize employers to offer benefits to their employees who care for dependents.
In addition to the tax credit, employers may offer other dependent care benefits such as flexible spending accounts (FSAs). With an FSA, employees can allocate a portion of their pay to be put into a special account to later be reimbursed for qualifying out-of-pocket dependent care expenses. This is convenient as it allows employees to save as they go and have more cash on hand if and when they need it.
Also, paid leave is another benefit available to certain employees, such as those covered by the Family and Medical Leave Act (FMLA) and those who are state or local government workers or teachers. Paid leave allows employees who need to step away from work due to caring for a dependent the opportunity to still receive wages, helping to offset any lost income or expenses incurred while caring for their dependent.
In many instances, providing dependent care assistance can make the difference between being able to keep or leave a job and can provide peace of mind to employees. As part of an employer’s overall compensation package and a way to attract and retain valued team members, dependent care benefits are a necessity for many employers.