Parents worry about child care tax break reduction if country goes off Fiscal Cliff
If Congress does not avoid the Fiscal Cliff crisis in the next two weeks, everyone's taxes will go up. But with some tax breaks on the chopping block, parents could also lose out on the hundreds of dollars they rely on to raise their children. Video by kgun9.com
Reporter: Justin Schecker
TUCSON (KGUN9-TV) - If Congress does not avoid the Fiscal Cliff crisis in the next two weeks, everyone's taxes will go up. But with some tax breaks on the chopping block, parents could also lose out on the hundreds of dollars they rely on to raise their children.
The Child and Dependent Care tax credit allows parents to report up to $3,000 of child care related expenses per child. If this tax break expires and parents can only report $2,400 per child, some parents will wonder if they even have enough money to afford child care.
Right now, parents receive up to 35 percent of their expenses as credit. That rate is set to drop to 30 percent.
Michelle Ihegborow sends one of her children to the Tucson Nursery School and Child Care center. If the country goes off the Fiscal Cliff and the Child and Dependent Care Tax credit is reduced, she is not sure whether she will send her newborn baby to daycare.
"Sometimes it's not worth it," Ihegborow told 9 On Your Side. "Sometimes you have to stay at home. It's cheaper for your to stay at home than for you to actually go to work."
Sherry Rollefstad is the Tucson Nursery School's executive director. Before 9 On Your Side contacted her, she said many parents were not aware of the looming tax credit changes. But after our interview request, she wanted to keep parents informed.
"They are very shocked, overwhelmed, stressed, don't know what they'll do," Rollefstad said because parents depend on that money to provide for their children.
"That's when they can buy their children shoes, new clothes," Rollefstad said. "They can get caught up on their bills because they get behind through the year just trying to struggle because they are not making much money."
"This is money that we count on," Ihegborow said. "Day care is very expensive and we hope to get part of that money back at the end of the year."
Parents should also be aware of changes to the Child Tax Credit. Instead of claiming $1,000 per child under 17, this tax break will be cut in half to only $500. More than 500,000 households in Arizona benefited from the Child Tax Credit in 2010.