There Needs to Be a Tax Break for Stay-at-Home Parents

Image Source: Thinkstock
Image Source: Thinkstock

The other day, my husband was chatting with a friend who had just had his first baby. As they talked babies and beer, the friend mentioned that his baby had just started at a new daycare now that his wife’s maternity leave was over, so he was rather excited for the tax credit that came with that.

And while, in theory, I was aware that such a tax credit existed for working parents who utilized daycare facilities, as a stay-at-home mom, I hadn’t really considered what that actually meant. But when I thought about it, I started to get a little ticked off because essentially, what is that childcare credit saying? That because someone else is watching your kid, that work has value? That because you’re a parent working out of the home, you deserve a little financial reward? That it’s pretty darn near impossible to juggle work and parenthood, but only if you happen to work outside of your home?

The tax care credit, according to my trusted financial advisor Turbo Tax, is actually a pretty sweet deal. Because unlike a tax deduction, which only reduces the income you have to pay taxes on, a tax credit literally cuts off the actual tax dollar amount you owe. So if you owe $1,000 in taxes, but get a $1,000 tax credit from daycare, guess how much your total tax bill is? Yup — nilch, nada, zip, and zero.

I won’t pretend to be a tax or financial expert, but I still think something is wrong with this picture, because staying home to care for children has a huge impact on the economics of a family and our economic health as a nation in general. You could argue that by staying home with my children, I am losing wages and valuable face time in the workplace that would increase my earning potential, so therefore I need a tax break. Or you could argue that by staying home with my children and actually having the time and resources to breastfeed them, and take them to the doctor when they’re sick, and do extra reading with them that I am creating healthier, more academically prepared students. Or you could argue that the work I do in caring for the next generation is pretty darn important and that deserves something, dammit.

Of course, on the flip side of some kind of tax credit for stay-at-home parents is the fact that we don’t exactly have to pay taxes for the work we do because we are essentially working for our own families. So how can we get a tax break if we don’t pay taxes? I get it, I get it.

“If I’m at home taking care of my kids and working a job that I pay taxes for at the same time, then what?”
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“When we hire people to come into our homes to do these things, the labor is counted as part of the economy and subject to tax,” the New York Times pointed out last year after Obama’s proposal to change tax benefits to give more credit to working parents (up to $3,000 per child). “If I pay you to watch my child and you pay me to watch your child, we both owe income tax. If you and I each watch our own children, the I.R.S. collects nothing — even though we have done substantially the same work for the same benefit.” The NYT writer argued that the current tax system already benefits stay-at-home parents and giving working parents the credit is a way of “evening the score,” so to speak.

Which, OK, I’ll concede to that point. If I’m not paying taxes to the government for the privilege of watching my own kid, why on earth should I get any kind of tax break, right? Well for starters, as a whole, I still do pay taxes and the amount of taxes we pay as a family unit is affected by me staying home. Our family size, for instance (definitely correlated to the fact that I stay home), where we live, what occupation my husband has, where my kids go to school.

But also, I do believe the government is overlooking one crucial population of stay-at-home parents who are primarily mothers and whose membership is only growing in size as daycare costs soar:

Work-at-home parents.

According to the latest statistics from the Global Workplace Analytics team, 3.7 million employees work from home at least half of the time and telecommuting in general for people who don’t work for themselves has grown by 103% since 2005. Those numbers don’t even include people like me, who work as independent contractors and are self-employed. Obviously, those numbers don’t specify how many of those work-at-home employees are parents specifically, but let’s face it: Flexibility in the workforce is the  No. 1 desired quality in a job for parents and it doesn’t get much more flexible than the ability to work from home.

So riddle me this, economic governmental people who make up these tax rules: If I’m at home taking care of my kids and working a job that I pay taxes for at the same time, then what? Am I official enough for an honorable mention by the U.S. Tax Bureau? Do I get some kind of help then or at least maybe someone could swing by and change the baby’s diaper the next time I’m on a deadline?

Either way, I think this picture looks a little off, because stay-at-home parents have an economic impact that extends beyond their own household bubble, and the workplace landscape is changing. So let’s get on that people, because tax time is a `coming, and I could use all the help I can get.

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