Hello, I was wondering if I work at a daycare and do not pay for child care would I receive the child care tax credit or would I end up owing money?

[xmasbaby0]

If you are not paying someone to take care of your child so that you can work, you cannot get the childcare credit.  Does your employer report the "free" daycare on your W-2 in any way?

[nikkielyse1992]

I havent started there yet so an answer with yes they do and an answer with no would be great.

[Carl]

Basically, if the value of the daycare is reported on your W02 as *TAXABLE* income, (meaning it's included in the amount in box 2 of the W-2) then you can claim that amount for the child care credit. Otherwise, if it's not reported on your W-2, or if it's not reported as "TAXABLE" income, you have nothing to claim.

[xmasbaby0]

So this is a job you have not started yet?  Sounds like having daycare for your child is a benefit provided by the employer.  It would be perfectly reasonable for you to ask them if they will be reporting the value of that childcare on your W-2.  If they do, then you can claim the childcare credit on your tax return.  If it is just "free" then there is no childcare credit to claim for something you are not paying for.  And by the way, the childcare credit is not a refund.  It can be used to reduce the tax you owe.

[ORTaxPrep]

Good morning,

The child and dependent care tax credit is a  non refundable credit that will help to reduce your tax liability. It is worth apx 20% to 35% of total qualifying expenses paid for the care of dependent(s) while you (and your husband, if married filing joint) are both working and/or attending school full time. 
This means that if you did not pay any money at all out of pocket for care, you will have no qualifying expenses required in order to claim the credit. Qualifying expenses may include payments to childcare centers, individuals or a combination. 
If your work covered your childcare bill by providing you “daycare benefits” this amount will be reported on your W-2, and depending on your specifics may cause your tax liability (aka tax bill) to increase. However, your work may very well categorized offering free childcare to employees as more of a “fringe benefit”; regarding the free/discounted care you received as dependent care assistance, or discounted services sold by the business. In this case, the amounts for care would NOT be reported on your W-2 and are NOT taxable by Federal (meaning you would not be at risk of owing anything additional). 

Hope this helps! 

- Kourt

[ORTaxPrep]

There are a few ways to find out if your employer will be reporting any amounts for childcare on your W-2: ask your employer directly, look at a prior years W-2 if available or look at your paystub. 

[ORTaxPrep]

It will be at the decision of the employer how and if they will report childcare. You will have to ask them directly if you have not yet started at this job. 

🙂