Working Women and the Child Care Tax Credit: Why It Matters

Three children eat cookies with talk glasses of milk as a woman in white watches over them.

At the Buffalo, NY, Lakeview nursery school for children of working mothers in 1943. Photo by Marjory Collins. courtesy of the Library of Congress.

April 13, 2015

Want a little break from preparing those taxes? If so, consider this question posed in the AAUW Journal from May 1953.

“Does this make sense to you? A practicing attorney can deduct from her taxes the cost of a secretary to look after her files but not the cost of competent help to look after her baby or [sick] mother while she works.”

Leaving no stone unturned, AAUW considered this and other questions related to gender equality within the tax code as far back as the 1930s. AAUW leaders pointed to a 1939 case in which a working mother hired a nurse to care for her child and then claimed the expense on her tax return. The mother reasoned that the expense was necessary for the production of her taxable income, and therefore it should be deductible.

The Board of Tax Appeals stated that there “might be some merit” to her case but that ultimately the work performed by the nurse was personal in nature, not business or professional. As a result, the deduction was not allowed. This decision was affirmed without opinion by the federal courts in 1940.

AAUW recognized this as an essential issue of fairness and one that particularly affected women. The issue of deducting dependent care costs continued to be a hot topic into the 1940s, as more women with caregiving responsibilities were entering the workforce due to labor shortages during World War II. AAUW continued to advocate for the child care tax credit into the next decade, when we finally began to see some change.

According to the AAUW Journal, in the 82nd Congress (1951–53), five bills were introduced related to this problem, and in the following session, 20 were introduced. Finally, in 1954, the tax code was overhauled, and the new amended code included the country’s first ever child care tax deduction in the amount of $600 to families earning no more than $4,500 annually. This was meant as a reprieve for taxpayers earning lower salaries.

This change did not occur without controversy. Opponents felt that expenses associated with child care were personal in nature. And of course, some argued that mothers should not be working outside the home at all. Supporters argued that child care costs were essential expenses for a mother to be able to earn an income and therefore should be deductible.

Thankfully, today’s taxpayers get at least some reprieve when it comes to child care, although many argue it does not go far enough. The Child and Dependent Care Credit allows taxpayers to claim up to $3,000 in dependent care expenses annually for one dependent and up to $6,000 for two or more dependents.

Like other issues affecting women, understanding the history allows us to marvel at the progress that has been made while simultaneously realizing how far we still have to go.

By:   |   April 13, 2015