Tax Credits & Vouchers

Each type of child care financial assistance has different qualifications, like income level, employment status or residency, so make sure to pay attention to all the facts. The following are some of the options: 

Child and Dependent Care Tax Credit – This tax credit helps families pay for child care for children under the age of 13 if the parents are working, or are looking for work. Parents who are full-time students can also claim the credit. Qualifying care includes child care centers, family child care homes, and care provided by paid friends or relatives, as long as the relative is not a dependent of the taxpayer. The size of the credit depends on the number of children in care, your family income, and the amount you paid for child care during the tax year. There are limits on the credit given for one child and two or more children. 

SC Voucher – Those who are eligible for this state child care subsidy pay part of the cost and the rest is paid directly to your selected child care provider. 

Head Start and Early Head Start – Head Start and Early Head Start are federally and sometimes state funded full or part-day programs that provide free child care and health services. Head Start and Early Head Start have income guidelines in order to participate. 

Pre-Kindergarten (Pre-K) Programs – South Carolina offers free Pre-K programs for 3 and 4 year old children. The goal of all pre-K programs is to make sure that children are better prepared for kindergarten. Pre-K programs are offered in public schools and other child care settings. Please contact your public school's district office for more information. 

Employer Dependent Care Assistance Programs (DCAPs) – Your employer may offer a DCAP, which allows you to have money taken out of your paycheck tax-free and put into a special account to be used for child care tuition reimbursement. The main purpose of this type of program is to help you lower the amount of taxes you have to pay during the year.

Earned Income Tax Credit (EITC)  – A refundable tax credit for low- and moderate-income families, particularly those with children, the EITC is based on family income and the number of children in the family. Both single- and two-parent families are entitled to the credit, as long as one parent is employed. 

South Carolina Tax Credits – A child and dependent care credit allows you to claim 7% of your allowable federal expenses for the care of a child or an elderly person, if that care is necessary for you to work. 

In-Home Care or Nanny Tax – When you hire an in-home caregiver, you become an employer under federal law. You need to be aware of laws regarding taxes, verification of employment eligibility, and minimum wage. For information on these topics, contact the Department of Labor, the Internal Revenue Services, an accountant, a tax advisor, or an insurance agent.

Volunteer Income Tax Assistance Program (VITA) – The VITA Program offers free tax help to low- to moderate-income (generally, $40,000 and below) people who cannot prepare their own tax returns. Certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations.