Fifty years ago, family members or friends were the childcare providers.
A survey by Care.com says professional childcare is not affordable for seven out of 10 American families.
Care.com HomePay vice president Kerri Swope said now more families are budgeting for childcare costs before a child is born.
“It is essentially now unaffordable for more than seven in 10 American families to afford child care,” said Swope.
She said childcare costs on average $100 more a week than it did five years ago. Daycare now $211 a week, versus five years ago is was less than $200.
“Five years ago that was on average $472 a week that you could expect to spend for a nanny. Now, that’s $580 a week,” said Swope.
She said if you’re going to hire a nanny, don’t forget to incorporate the “nanny tax” into your budget. The IRS requires anyone with household help such as a nanny to pay taxes.
Swope says tax breaks can save families anywhere from $600 to $2,300 dollars a year depending on their situation.
Houston tax attorney and CPA Mark Klecka said nowadays childcare workers are usually minimum wage earners and with that increasing, it will raise childcare costs. Daycare costs vary on location and quality of school.
“Most of the time that the payments are between $7,000 to $8,000 per child, per year,” said Klecka.
New 2018 tax credits are taking effect.
“It was $1,000, and now they’ve increased it to like $2,000, and then there will be an additional credit for providing child care.”
He said now, a deduction for childcare is along the lines of $600, but isn't going to offset your total cost or pay for the entire expense of child care.
Swope said childcare costs is impacting family’s decisions to have children, and how many, as well as career decisions. Some are choosing to wait longer to have kids, if they have children at all.