Child Care in Your Home Fee Assistance Pilot Program

The Defense Department knows child care is critical for military families with children. Without safe and reliable care in place for their children, military parents can’t stay focused and mission ready. That’s why the department continues to expand the Child Care in Your Home fee assistance pilot program, formerly named In-Home Child Care Fee Assistance. This program helps military families who have determined that full-time child care in their home is the best solution to meet their needs.

Each pilot year, CCYH has evolved and expanded to better meet the needs of military families. For pilot year three, the department has added additional enhancements to help meet the child care needs of families.

Child Care in Your Home program details

The Child Care in Your Home fee assistance pilot program provides fee assistance to service members using in-home child care providers.

Child care provider eligibility

Child Care in Your Home providers must be eligible to work as a child care provider in the United States (e.g., be a U.S. citizen or lawful permanent resident) and:

• Be at least 18 years of age
• Hold a high school diploma or equivalent
• Read, speak and write English
• Comply with applicable employment laws, to include income tax regulations

Provider eligibility includes lawful permanent residents and family members:

• A lawful permanent resident is a foreign-born person who may permanently live and work in the U.S. but is not yet a U.S. citizen. Talk with the DOD’s third party administrator for additional details about making this selection for care.
• A family member is defined as a person who is related to each child by blood, marriage or adoption, such as an aunt, uncle, grandparent, great-grandparent, great-great-grandparent, first cousin, niece, nephew, grandniece, grandnephew, great-aunt, greatuncle or an older sibling. Family members must be at least 18 years of age.
• A family member who serves as the child care provider in your home may not be the parent, stepparent or legal guardian of the child or children in care.
• All providers, even those preselected by or related to the family, must complete all training and background check requirements established for the program.

Child Care in Your Home enhancements and changes in pilot year three impact and support military families in all CCYH regions/locations. These include:

• Families are permitted to share a nanny/in-home provider through a Nanny Share Agreement.
• CCYH providers may care for their own children in the service member’s home when there is a written agreement between the service member and the provider. For the health, safety and well-being of the children in care, under this agreement the child care ratio may not exceed six children to one adult. This may include no more than two infants or children considered incapable of self-preservation.
• CCYH providers will be allowed to reside with the family when hired to provide child care services. Service members, as the employers, must follow the labor and tax laws when employing their live-in provider.
• CCYH fee assistance is applied toward the child care fee only and will not include costs related to the provider residing at the service member’s home or residence.
• The amount of fee assistance paid for each child is based on the family’s total family income and will not cover the entire cost of child care.

Families are responsible for finding their own in-home child care providers and may use the expanded child care service available through Military OneSource to search providers.

Tax implications

The IRS identifies nannies and most household workers as employees (versus independent contractors) of the family for which they work. As an employer, the service member is responsible for paying Social Security and Medicare taxes. The program administrator will provide the service member information on tax-related requirements that must be considered when hiring an in-home provider. These requirements include:

• Identifying and calculating taxes to withhold each pay period
• Preparing year-end tax documents
• Monitoring changes in household employment tax law

In addition to these requirements, it is highly recommended that service members consult with payroll and tax compliance experts. The administrator shall also provide information to the in-home provider on tax requirements for gross wages received. Depending on whether the fee assistance is considered taxable or non-taxable, as legislated by Congress, this may also include the in-home provider’s fee assistance income. Parents who employ care providers in their home can read more about these tax implications and find detailed information in the IRS publication, Household Employer’s Tax Guide.