Day Care Provider

[Guest moseelig]

I always believed that under the Dependent Care Program, the provider had to be a licensed day care center, and that relatives were not acceptable. I have read that this is not the case. Has it always been this way? Also, can language be added to the plan document indicating that only "licensed" providers can be used?

[papogi]

Relatives are OK. It can't be someone you claim an exemption for, however, and can't be under age 19. You can't make your plan more lenient than the regs allow, but you can make it more restrictive. You could add a provision that the provider can't be a relative. If the employee complains, they can just cover those expenses under the child care credit on their taxes.

[GBurns]

It has always been that way.

Be careful in trying to exclude "relatives". What happens if the "relative" is also licensed as a provider or ordinarily provides such services?