An average amount of $18,000 per family per year goes into childcare in the United States. Because 84 percent of single parents work, and 63 percent of families have two working parents, for most, childcare isn't optional—it’s a necessity.
There are several types of childcare you can choose from, and the best choice varies from parent to parent and child to child.
Here’s a rundown of the most common options:
- Child care center or day care that provides child care services, and even early learning, in a non-residential setting. Be sure to check the Child Care Aware® of America's State Licensing Information Map to verify if facilities in your state require child care licensing, and if so, that the facility you use is properly licensed..
- Family child care home that provides child care services, and sometimes early learning, in a residential setting. Normally, this means the group of children is smaller and each child will receive more one-on-one care.
- At Home Child Care Services, where a nanny or babysitter goes to your home or lives in your home and cares for your children.
So how can parents better prepare for child care costs? Here are a few tips that can help you budget:
- Do your homework
Research what the average childcare costs are in your town. Care.com's pay and nanny tax calculators are a good place to start in determining your budget, how much you can afford to spend on childcare, and what options make the most sense for your family.
- Sign up for a flexible spending account
Many employers offer flexible spending accounts (FSAs), in which families can set aside up to $5,000 pre-tax for childcare expenses. Additionally, some businesses offer child care reimbursements for working parents or on-site daycare centers.
- Get tax breaks
Most parents are unaware that they are eligible for childcare tax breaks. Be sure to claim the federal child and dependent care tax credit. For all the details, download IRS Publication 503, Child and Dependent Care Expenses.