Saturday, March 1, 2008

Taxes, Childcare and Chronic Illness

I got sick back in early June 2007, as many if not all of you know. It wasn't until I was hospitalized in early July for just over a week that we realized I wasn't going to be able to take care of our 3-year-old daughter, Ellie, for awhile.

At the time, we optimistically assumed that I'd be better by the end of the summer and enrolled Ellie in Kindercare planning to take her out six weeks later for our planned Labor Day weekend trip to Chicago. Then she'd start the 7.5-hour-per-week preschool I'd signed her up for and paid two months' non-refundable tuition plus registration.

Best laid plans, and all that. Here it is March, and I'm still sick and still unable to care for Ellie. Even just an hour or so while my husband does some yard work on the weekend exhausts me.

But, I thought, at least daycare expenses are a tax deduction. So I carefully printed out all my online receipts and kept them in a file until I was ready to work on our taxes.

I've used the Turbo Tax program for years, but since this was my first experience with daycare expenses, I was shocked to find out that they were only deductible if both spouses were working, full-time students or one or both was so extremely disabled that s/he could not dress, bathe or feed himself/herself.

I thought the Social Security standard for disability was tough! This is just unbelievable.

And what about families that are barely making it on two incomes when one parent gets too sick to work but the other parent's income isn't enough to cover both living expenses and daycare?! I suppose in that case, the child/ren might qualify for a Head Start program, if (and it's a huge if) there's space available since our government (state and federal) doesn't see fit to fully fund social programs like that.

But we don't qualify for that kind of aid. And I'm not looking for a handout.

But it seems to me that if full-time students with little or no earned income can get the tax deduction for daycare expenses, there should be some sort of provision for people who can get notes from their doctors to swear that they are unable to take care of their child/ren due to serious illness. I mean, gosh, if I'm sick enough to qualify for a handicapped parking pass, doesn't that suggest that I might have trouble chasing after a 3-year-old for 10 hours a day while my husband's at work?

I had a brief hope that perhaps I could use the childcare expenses as a medical deduction since I wouldn't have needed it if it weren't for my being sick. But I checked with a good friend who's a tax attorney and she said it would be a big red flag begging the IRS to audit us. And truthfully, since you have to meet the 7.5 percent of your income threshold to get a deduction, it only would have increased our refund by $600 for our $11,000 in out-of-pocket expenses (including $7,800 in childcare expenses). (Although I would have been happy for an extra $600. But it's totally not worth the stress of an audit plus whatever interest and penalties they'd charge us if we got caught.)


I plan to write to the Democratic presidential candidates as well as Oregon's U.S. senators about this crack in the system. And I strongly urge others who have chronic illnesses, or have friends or family members with chronic illnesses, to write to their senators and congressional representatives about this too. And please consider doing it whether you have children or not.

1 comment:

Karli said...

That's awful. I'm so sorry. Have you seen "Sicko" yet? Made me want to move to France. I'm not a big fan of Michael Moore, although I've seen most of his work, but this one is pretty good. Universal healthcare is a huge issue to me, and your situation is a prime example of how our system fails our citizens. I had no idea until reading your post that tax deductions were this strict. I mean, can't dress yourself? Are you kidding me? Whoever writes these policies doesn't have kids. A person in poor health is no longer able to care for a toddler long before reaching the point of not having the strength to dress oneself.