Thursday, September 07, 2006

Doyle Proposes Much Needed Child Care Tax Credit

Governor Doyle is proposing to allow families to deduct post-tax child care expenses on their tax statements each year.

My wife and I spend about $900 a month on child care for our 2-year old daughter (and it was even more expensive before she turned two). It's worth every penny to get a good place, but the expense is still huge for a young family.

While we participate in a flex account through my wife's employer that allows us to set aside money for child care expenses pre-tax, the limit on what we can put into it in a year is $5000. Considering our yearly expenses for child care total over $10,000, that leaves a significant remainder that must be paid exclusively with post-tax dollars.

Doyle's plan would allow us to deduct an additional $3000 in expenses after the flex account runs dry ($6000 if you have two kids in care), thereby reducing our post-tax expenditures from $5000 to $2000. That's significant for a young family like mine.

And lest anyone think I only support this proposal because of my personal situation, the fact is the proposal probably wouldn't be enacted much before my daughter is already out of child care (we have 4-year old public kindergarten in my community).

Simply knowing what it's like to shell out over $10,000 a year on an entry-level job income is enough to convince me that this tax break is warranted and beneficial for many people in the state, regardless of whether I'm able to actually take advantage of it myself.

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