How to cut child day care costs
Check out workplace benefits
While a few companies offer on-site day care, employers are much more likely to offer child care flexible spending accounts as part of their employee benefits packages.
"With dependent care flex, you can have up to $5,000 deducted from your paycheck and put into your flex account," says Amy Platt, CPA and publisher of Long Island Parent Source website. "When you get a bill from a baby sitter, day care center, summer or day camp, you can pay for it using pretax dollars."
That means, parents in the 35 percent tax bracket who max out their flex spending accounts will save approximately $1,750 on their taxes. The drawbacks, says Platt, are that the program is only available to parents who work for companies that sponsor it, and all money invested in flex accounts must be used for qualified expenses.
"If you invest $5,000 but only use $2,000, you lose the rest of that money," says Platt. "You have to be careful about how much you put in."