New IRS Webpage Helps Employers Determine Eligibility for Up to $150,000 Business Tax Credit
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February 8, 2024
The IRS announced the launch of a new page on IRS.gov explaining the Employer-Provided Childcare Tax Credit, an incentive for businesses to provide child care services to their employees.
“This business tax credit helps employers provide their employees with child-care services and facilities,” said IRS Commissioner Danny Werfel. “We’ve heard that some employers may be overlooking this important credit, so the IRS has created a new one-stop shop for information on IRS.gov that provides an easy place to learn more.”
The information is available at IRS.gov/employerchildcare or by searching “employer child care.”
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.
Employers should complete Form 8882, Credit for Employer-Provided Child Care Facilities and Services, to claim the credit for qualified child care facility and 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 on Form 3800, General Business Credit.
The Employer-Provided Childcare Tax Credit homepage on IRS.gov has more information about claiming the credit, including the requirements for qualified child care expenditures and qualified child care facilities.
The information in this guide has been gathered from many sources, including the Internal Revenue Service, the Social Security Administration, state agencies, professional organizations and members of the NJCPA. The COVID-19 pandemic has prompted the majority of state agencies to offer more online and prerecorded services. Though offices have reopened after the COVID-19 shutdown, it’s best to check online or call before you visit.
Material contained within this guide should be augmented by, and used in accordance with, a certified public accountant's professional judgment. Your CPA can properly apply the tax laws and regulations to the facts and circumstances of your particular situation. For help with locating a CPA, visit findacpa.org.
The New Jersey Society of Certified Public Accountants is not responsible for any claims arising as a result of this information or its usage.
This guide was updated in October 2023. Future users of this material are cautioned that some portions, particularly tax-related information, may become outdated.