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Weeks ago, I posted about the difficulties in finding a good nanny and the financial and tax consequences of choosing a nanny for childcare.  The rules, as they are written, can be somewhat confusing.  But, as a tax attorney, I felt like I finally mastered the basics.  That is, until I finished doing my taxes this week.  That's right, this week.  I rarely file on time.  It's one of the joys of being a tax attorney and a mom - no time to do my own taxes.  But this week, I hunkered down and started hammering away.

At first glance, I thought for sure that our deductions would be fairly significant.  You don't want to get me started on the amount of student loan interest that we pay every month (the equivalent of two house payments) or why it's ridiculous that medical expenses are subject to a ridiculously high floor... 

But the thing that really got me was the child care expenses.

And yes, I know what the rules and limits are.  I just wasn't sure how they were going to apply to me.

With one child, the numbers were easy.

But with three?

My oldest daughter is in pre-K, which would ordinarily be tax deductible.  My youngest daughter and my son stayed at home with the nanny, which would also normally be tax deductible.

But this is the thing.  My husband and I work together.  We own our own business.  For the last several years, my husband has pulled most of the salary and I have put my money back into the business.  It has, for years, worked out well.  That is, until we started figuring the childcare expenses.

In order for me to work full time, we need childcare for the three children.  However, the expense of paying for childcare for three children is mind-blowing.  It is more than three times the cost of our home.

And this is the weird thing about our government's priorities:  if I had purchased a home that was more than three times the cost of our current home, the interest on that mortgage would be 100% deductible.  But because it's for childcare, it is subject to two separate limits:  1) the cost of the childcare cannot be deducted beyond the income of the lowest earning parent (in our case, me) and 2) the amount that is actually deductible is phased out based on income.  So, in order to make money, I need time to work.  The more money that I make, the fewer dollars I can claim for the increased childcare expense.  It's incomprehensible.

My deduction this year?  A whopping $1200. 

It's less than the payroll taxes that I paid for the nanny.

Our priorities in this country are seriously skewed when I can deduct the full cost of a beach home but not the cost of quality child care.