Employer-Provided Childcare provides employers with up to $150,000 business tax credit

The Employer-Provided Childcare Tax Credit, is an incentive for businesses to provide child care services to their employees. This business tax credit helps employers fund employees with both child-care services and facilities. 

This tax credit is designed to help employers cover some of the qualified child care facility and resource and referral expenditures associated with providing child care services to their employees. A qualified child care facility is one that meets the requirements of all applicable laws and regulations of the state or local government in which it is located. 

The credit is limited to $150,000 per year to offset 25% of qualified child care facility expenditures and 10% of qualified child care resource and referral expenditures. 

The credit is part of the general business credit subject to the carryback and carryforward rule. This means employers may carryback unused credit one year and then carryforward 20 years after the year of the credit. Taxpayers whose only source for the credit is from pass-through entities can report the credit directly. 

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