General Services Administration (GSA) Child Care Subsidy Program Eligibility Determination and Financial Considerations
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- Monthly Maximum GSA Child Care Benefit
- Financial Considerations
- Child Care Expense Credit
- Earned Income Credit (EIC) and Child Care Credit
Eligibility is based on the Total Family Adjusted Gross Income (AGI) from the Federal Tax Return Form 1040 and child care costs charged by your Child Care Provider. Employee/Families are responsible for a Family portion of their total child care costs, and GSA will pay the difference directly to the Child Care Provider once the Employee and Child Care Provider have been approved.
For recipients with AGI of $50,200 or less, the Employee/Family portion will be 5 percent for one child, 8 percent for two children, 10 percent for three children, 12 percent for four children, and 15 percent for five children. GSA will pay the difference between actual child care costs and the Employee/Family portion.
For example, for an Employee whose Total Family Adjusted Gross Income is $46,854.00 and has one child in child care at an annual cost of $9,500, their Employee/Family annual portion will be $2,342.70 (5 percent of AGI) and GSA Subsidy Administration Section will pay the difference of $7,157.30 directly to the Child Care Provider which is paid out in monthly increments, an example of which is below.
- Total Monthly Child Care Cost: $791.67
- Employee/Family Portion: $195.23
- GSA Subsidy Benefit: $596.44
For recipients with AGI greater than $50,200, a sliding scale increases the Employee/Family portion. For each additional $100 in AGI, the Employee/Family portion goes up by approximately 1 percent.
For example, for an Employee whose Total Family Adjusted Gross Income is $61,580.00 and has one child in child care at an annual cost of $9,500.00, their Employee/Family portion will be 14.10% of their AGI, or $8,682.78 (14.10% of $61,580) and GSA Subsidy Administration Section will pay $817.22 to the Child Care Provider which is paid out in monthly increments, an example of which is below.
- Total Monthly Child Care Cost: $791.67
- Employee/Family Portion: $723.57
- GSA Subsidy Benefit: $68.10
The GSA will pay the difference between the Employee/Family’s actual costs and their Employee/Family portion, as long as their actual costs do not exceed the maximum amounts for the most expensive GSA-sponsored Child Care Center in the region in which the Employee/Family resides as referenced on the table below.
According to the GSA Child Care Subsidy Program guidelines, the Employee/Family’s Total Family Income (TFI) from the Federal Tax Return Form 1040, and the cost of child care, the Employee/Family’s calculated GSA Child Care Subsidy Benefit must exceed the minimum benefit of $20.00 per month in order to qualify for a GSA Child Care Subsidy Benefit.
|Region||0 - 12 Months||13 - 24 Months||2 Years||3 - 5 Years||6 - 12 Years||
6 - 12 Years
Employees need to research their individual situation or consult a *tax advisor to determine how their taxes will be affected by a subsidy. In general, if an Employee receives a subsidy that is greater than $5,000 ($2,500 for Married, Filing Separately); their taxable income will increase by the difference between the actual subsidy and $5,000, if there is any. For example, if an Employee receives a subsidy of $5,500, their taxable income will increase by $500. All payments made on the Employee's behalf to their Child Care Provider will be reflected on their Pay and Leave Statement as NON-TAXABLE CCS up to $5,000.00 and TAXABLE CCS for any amount above $5,000.00. This information will also be included on the Employee’s W-2.
- $5,500 Amount of Subsidy
- $5,000 Non-taxable portion of subsidy
- $500 Increase in taxable income
GSA has developed a Dependent Care Assistance Plan (DCAP) that, in general, permits Employees to exclude Child Care Subsidy benefits up to $5,000 if they are a single taxpayer, Head of Household or a Married person filing jointly. However, there may be other tax consequences.
Child Care Expense Credit
Employees need to research their individual situation or consult a *tax advisor to determine if their taxes will be affected by the subsidy. In general, receiving a subsidy will reduce the Child Care Expense Credit.
Earned Income Credit (EIC) and Child Care Tax Credit
Employees need to research their individual situation or consult a *tax advisor to determine if their taxes will be affected by the subsidy.
In general, if the subsidy affects the Employee’s taxable income (see above), then, as their taxable income increases, the amount of Earned Income Credit will decrease. In general, a $500 per child tax credit will be phased out at income levels that are above GSA thresholds for subsidy.
*Please defer to a tax advisor if you have any questions regarding your individual tax situation and the effect that a GSA Child Care Subsidy Benefit may have upon you.