tax breaks — September 16, 2020

Financial Help for Working Parents with Childcare Needs

by Susannah McQuitty

Father kissing his son goodbye as he leaves for work.

Parents who still have children living at home during the chaos of COVID-19 are in dire need of a helping hand. Between time management, arranging work around school schedules, or trying to find a job while keeping your household in order, parenting school-aged kids in 2020 is no small task.

Today, we’re pointing you toward financial help that may be available to you, given your household situation.

How do working parents get paid when they must take off work to stay home with children?

Many households are seeing one or both parents quitting their jobs, but filing for unemployment insurance means losing employer-provided benefits like health insurance.

So how do you take the necessary time to care for household needs while maintaining your workforce attachment? That’s where the Families First Coronavirus Response Act (FFCRA) comes in.

The FFCRA is a law that requires some employers to help provide working parents with additional paid sick leave to care for members of the household affected by COVID-19—and that includes children under the age of 18 who need care due to school closures or part-time virtual learning.

How much paid leave does the Families First Coronavirus Response Act provide?

Among other things, the law ensures that your employer will provide at least two weeks (up to 80 hours) of emergency paid sick leave if your child’s school or care center is unavailable. While it’s paid leave, the FFCRA only ensures two-thirds of your regular pay, limited to $200 per day.

One of the best features of the FFCRA is that it allows for flexibility: The paid leave can be taken intermittently as needed (with employer permission), and it can be used for virtual learning and partial school opening. If you have to stay home and cannot work due to your child’s limited care options, you can take this paid leave to do so.

Another awesome feature is that, if you have been working for your employer for at least 30 days, you’ll qualify for an additional 10 weeks of paid leave at the same rate of two-thirds your regular pay.

Does the FFCRA have any limitations for working parents who need time off to care for children at home?

There are limitations, however. The law is only active through December 31, 2020, so it won’t last the entire school year. It also only applies to certain employers with fewer than 500 workers, and smaller businesses with 50 employees or fewer may be exempt from providing the paid leave due to budgetary concerns. Unfortunately, some healthcare providers and emergency response workers are not eligible.

Are there any tax breaks that working parents can use to help with childcare costs?

With more people considering the option of paying for child care during regular school hours, the Child and Dependent Care Credit is a resource that’s been around for years—and has never been more needed.

Basically, the credit is worth up to 35% of your qualifying expenses, up to $1,050 for one dependent, and $2,100 for two or more. You can read more details in our Tax Guide.

Keep good records of expenses—additional aid may be on the way

Even the best-laid plans for education in 2020 may still be costly and unpredictable. Legislators are still debating the next round of Coronavirus relief on a national level, and the sorts of expenses you could be reimbursed for or get a tax deduction on are unclear.

Examples of expenses to track include:

  • Wi-Fi boosters or higher speed plans for improved internet connection
  • Space in the home used exclusively for school
  • Laptops and electronic accessories needed for virtual learning
  • Mileage on your vehicle if you must drive to a public internet hot spot
  • Courses, books and other supplies

Some states have tax breaks for private school expenses—be sure to look into any state-specific tax breaks that may apply to your virtual learning situation.

Stay up-to-date

The best practice is to stay informed and keep records of your Coronavirus-related expenses, just in case you could get tax breaks next year. Get all the latest news on COVID-19 aid and how it affects your finances by subscribing to the blog—we’re in this with you, and we’ll keep you updated as we move forward in 2020.

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