Help paying for child care

The Child Care and Development Fund sends federal money to states, which then decide who qualifies and how much help a family gets. Federal rules cap eligibility at 85 percent of the state's median income, so the dollar limit is different in every state. Because it is tied to local incomes, the same household income can qualify in one state and not in the state next door.

A small number of states spend their own money to go past the federal ceiling. Maine, New Mexico, and Vermont all set limits above 85 percent of state median income, which is why their thresholds look so different from the rest of the table.

States also apply their own rules on top of the income test: most require that a parent is working, in school, or in job training, and many maintain a waiting list. The income limit tells you whether it is worth applying, not whether you will be served immediately.

Head Start is funded federally and delivered by local programs rather than by states, so eligibility rules are the same everywhere. The income test is the federal poverty line, which is a national figure rather than a state one. That is the key difference from CCDF.

Income is only one of four routes in. A child who is homeless, a child in foster care, and a family that receives or could receive public assistance all qualify regardless of income. Programs are required to prioritise these families.

Programs may also fill up to 35 percent of their places with families who earn more than the poverty line but less than 130 percent of it, once eligible families in their area have been served.

Unlike CCDF and Head Start, the Child and Dependent Care Credit has no income ceiling. Earning more does not disqualify you, it only lowers the percentage you get back. That makes it the one program on this page nearly every working family paying for care can use.

You claim it against expenses you actually paid so that you, and your spouse if you file jointly, could work or look for work. The credit is capped by the amount of care expense it will count, and then by a percentage that steps down as your income rises.

The percentage starts at 35 percent for the lowest incomes and falls by one point for every $2,000 of adjusted gross income above $15,000, until it flattens at 20 percent. It stays at 20 percent no matter how much more you earn.

A Dependent Care Flexible Spending Account is set up by an employer, not by a government agency. You decide during open enrolment how much of your pay to route into the account, and that money is excluded from your gross income.

The saving is your own tax rate applied to whatever you set aside, so it is worth more the higher your bracket. That makes it the natural counterpart to the tax credit, which is worth more at lower incomes.

You generally cannot claim the same dollar of expense through both an FSA and the Child and Dependent Care Credit, so it is worth comparing the two before you enrol rather than after.