Today, we filed our taxes and I’ve come to question whether our government is serious about encouraging entrepreneurship. As parents and entrepreneurs, it’s unfortunate that our tax laws do nothing to encourage entrepreneurship among hardworking moms and dads like ourselves.
Let me elaborate…
Trekaroo is a bootstrapped startup. When Brennan, Esther and I started Trekaroo, we decided that we’d bootstrap it instead of raising large amounts of angel funding and venture capital. We all feel passionately about what we are building in Trekaroo and are willing to put in sweat equity for no income. However, to do what we do, we’ve had to pay for some childcare. Childcare in the bay area can easily add up to over $2000 a month for two kids. Well, there is this wonderful tax deduction that working dual income families can take advantage of call the Child and Dependent Care Credit. However, I was so disappointed to learn this week that the law states that in order to take advantage of this credit, both mom and dad need to have made income in the year they want to claim that credit. Furthermore, the size of the credit is measured as a percentage of your income (35%)). As an entrepreneurial mom and dad duo, we’re in tough luck under this tax law. While we badly need the tax credit considering our minuscule income for 2008, we really can’t benefit from the credit at all. Since neither of us received any income from Trekaroo, we do not even qualify for the tax credit. Secondly, 35% of our total income would barely cover what we’ve had to pay for childcare.
So, I ask, why does the tax law not seek to encourage the entrepreneurial endeavors of moms and dads? If congress wants to encourage entrepreneurship, bootstrapping visionaries like ourselves should be given even more tax breaks.
Tax Girl critises this tax law for other reasons: The Child and Dependet Care Credit Sucks