Kindercare tax statement: Year-End Tax Statement Information | KinderCare

School Readiness Tax Credits – Louisiana Department of Revenue

In 2007, the Louisiana Legislature passed Act 394, which enacted
Revised Statutes 47:6101-6109
to provide a package of tax credits known
as the School Readiness Tax Credits. These credits allow tax breaks to families,
child care providers, child care directors and staff, and businesses that support
child care in an effort to encourage child care facilities to voluntarily participate
in the quality rating program administered by the Louisiana Department Education (LDE)
under the name of Quality Start Child Care Rating System. The Quality Start web site also
includes a search
feature that can be used to determine the quality rating for child care centers
located in parishes throughout the state.

The School Readiness Tax Credits, which are effective for income tax years beginning
on or after January 1, 2008, and franchise tax years beginning on or after January
1, 2009, are as follows:

1. 
   Child Care Expense Tax Credit – —
   (R. S. 47:6104)
   
2. 
   Child Care Provider Tax Credit —
   (R.S. 47:6105)
   
3. 
   Credit for Child Care Directors and Staff —
   (R.S. 47:6106)
   
4. 
   Tax Credit for Business-supported Child Care —
   (R.S. 47:6107)
   
5. 
   Tax credit for Donations to Resource and Referral Agencies —
   (R.S. 47:6107)
   

To provide additional guidance for the School Readiness Tax Credits, the Louisiana
Department of Revenue (LDR) and Louisiana Department of Children and Family Services (DCFS)
adopted
LAC 61:I. 1903
.

1. Child Care Expense Tax Credit —
R.S. 47:6104

A school readiness child care expense tax credit is allowed for taxpayers who have
a qualified dependent under the age of six who, during the year, attended a child
care facility that participates in the quality rating program and has earned at
least two stars.

The school readiness child care expense credit is based on the quality rating of
the child care facility and is a percentage of the existing Louisiana child care
expense credit provided for by
R.S. 47:297.4
. The school readiness child care expense tax credit is in
addition to the regular child care expense credit.

The percentage of the regular child care expense credit allowed for the school readiness
tax credit is based on the child care facility’s quality rating as follows:

Parents with multiple qualifying children are allowed a credit for each child with
the credits separately calculated. Also, if a child receives services from more
than one child care facility during the year, the credit is calculated based on
the facility with the highest quality rating.

• 
  Refundable credit — The school readiness child care expense tax
  credit is refundable for taxpayers whose federal adjusted gross income is $25,000
  or less. The refundable credit is claimed by resident taxpayers on Line 15 of the
  2018 Louisiana individual income tax return, Form IT-540, and Line 16 of the 2018 Form IT-540B
  for nonresidents.

• 
  Nonrefundable credit — Taxpayers whose federal adjusted gross income
  is greater than $25,000 may apply the credit to their tax liability and if the credit
  is more than the taxpayer’s liability, the remaining credit can be carried forward
  and applied to later tax years. Excess credits can be carried forward for up to
  five years. The nonrefundable credit for 2018 is claimed by taxpayers on Schedule J
  of the Louisiana individual income tax return, Form IT-540, or Form IT-540B for
  nonresidents.

Proof of Credit

Taxpayers who claim the school readiness child care expense credit must obtain a
Louisiana School Readiness Tax Credit, Child Care Expense Credit Certificate, Form
R-10614 from their child care facility. The facility must complete the top portion
of the form including the facility’s name, license number, the Louisiana Revenue
Account Number, the facility’s quality rating, and the date of the rating award.

Child care providers must provide completed forms to parents or guardians for each
qualifying child who attended the facility.

The school readiness child care tax credit is calculated as follows:

Example 1

Family’s federal adjusted gross income	$20,000
Refundable or nonrefundable tax credit	Refundable
State child care credit amount	$50
Qualified dependent under age six that attended a quality rated child care facility	1
Quality rating of the child care facility	3*
Percentage of state child care credit allowed	100%
School readiness child care expense tax credit ($50 x 100%)	$50
The $50 school readiness child care expense credit can be claimed in addition to the $50 regular child care credit and, if the credit exceeds the taxpayer’s tax liability, the excess amount will be refunded.

Example 2

Family’s federal adjusted gross income	$30,000
Refundable or nonrefundable tax credit	Nonrefundable
State child care credit amount	$50
Qualified dependents under age six that attended a quality rated child care facility	2
Quality rating of the child care facility for first child	4*
Percentage of state child care credit allowed for first child	150%
School readiness child care expense tax credit for first child ($50 x 150%)	$75
Quality rating of the child care facility for second child	3*
Percentage of state child care credit allowed for second child	100%
School readiness child care expense tax credit for second child ($50 x 100%)	$50
Total school readiness child care expense tax credit ($75 + $50)	$125
The $125 school readiness child care expense credit can be claimed in addition to the $50 regular child care credit and can be applied against the taxpayer’s liability with any excess credit carried forward for up to five years.

2. Child Care Provider Tax Credit—
R.S.
47:6105

Child care providers who own and operate a facility where care is given to foster
children in the custody of the DCFS or to children who participate in the
Child Care Assistance Program
administered by the LDE are eligible for
the refundable School Readiness Child Care Provider tax credit.

The tax credit is based on the average monthly number of children who attend the
facility multiplied by the applicable credit amount based on the quality rating of the
child care facility.

The LDE will provide certification by March 1 to qualifying child care providers
regarding the average number of children participating in the program. The certificates
must be retained in the Child Care Provider’s records and be available to LDR on
request.

The credit can be taken against individual income tax, corporation income tax, or
corporation franchise tax depending on the child care facility’s entity type as
follows:

• 
  Individual income tax credit — If the child care facility is owned
  by a sole proprietor, or a flow-through entity such as a Limited Liability Company
  (LLC), Partnership, or Subchapter S corporation, the credit will be claimed on the
  Resident Individual Income Tax return, Form IT-540, Schedule F, or the Nonresident
  and Part-Year Resident Individual Income Tax Return, Form IT-540B, Schedule F-NR.
  Partners and shareholders should apportion the credit based on each partner’s
  or shareholder’s percentage of ownership.

• 
  Corporation income or franchise tax credits — If the child care
  facility is owned by a corporation, the credit will be claimed on the Corporation
  Income and Franchise Tax Return, Form CIFT-620, Schedule RC.

• 
  Nonprofit Organizations — If the child care facility is owned by
  a nonprofit organization, the tax credit will be taken on the Corporation Income
  and Franchise Tax Return, Form CIFT-620, Schedule RC. Nonprofit organizations
  that are not registered with LDR because they are exempt from tax must register
  with LDR for corporation income tax and obtain a Louisiana revenue account number
  to be able to claim the credit.

3. School Readiness Directors and Staff Tax Credit—
R.S.
47:6106

Child care directors and eligible staff are eligible for a refundable tax credit
if they work at least six months for a licensed child care facility that participate
in the quality rating system and are enrolled in the
Louisiana Pathways Child Care Career Development System
.

The refundable tax credit is based on the educational level attained through Louisiana
Pathways Child Care Career Development System. The credit is adjusted annually by
the percentage increase in the Consumer Price Index United States city average for
all urban consumers (CPI-U), as prepared by the United States Department of Labor,
Bureau of Labor Statistics, as determined by the secretary of the Department of
Revenue on December first of the preceding calendar year. The credit amount is as follows:

The tax credit is claimed on the Resident Individual Income Tax return, Form IT-540,
Schedule F, or the Nonresident and Part-Year Resident Individual Income Tax Return,
Form IT-540B, Schedule F-NR.

LDE will provide certification to child care directors and staff indicating the
educational level achieved by January 31. The Louisiana School Readiness Tax Credit,
for Child Care Director and Staff, Form R-10615 must be completed by the child care
provider and given to the directors and staff. The LDE will also furnish the certification
information to LDR as verification of the directors and staff’s eligibility for
the tax credit.

Directors and staff must enter the facility license number from Form R-10615 on Line 5A of Schedule F and
attach a copy of Form R-10615 to their return. Failure to do so will result in processing delays.

4. Tax Credit For Business-Supported Child Care—
R.S.
47:6107

Businesses that support quality child care are eligible for a refundable tax credit
based on the quality rating of the center. Eligible support includes:

• 
  Expenses to construct, renovate, expand, or repair an eligible child care center,
  purchase equipment for a center, maintain or operate a center, not to exceed $50,000
  in expenses per tax year;

• 
  Payments made to an eligible child care facility for child care services to support
  employees, not to exceed $5,000 per child per tax year; and/or

• 
  The purchase of child care slots at eligible child care facilities actually provided
  or reserved for children of employees, not to exceed $50,000 per tax year

The credit is for a percentage of the eligible expenses based on the quality rating
of the child care facility to which the expenses are related or the rating of the
child care facility that the child attends as follows:

The refundable credit can be taken against individual income tax, corporation income
tax, or corporation franchise tax depending on the business’s entity type as follows:

• 
  Individual income tax credit — If the business providing the
  support is owned by a sole proprietor or a flow-through entity such as a Limited
  Liability Company (LLC), Partnership, or Subchapter S corporation, the credit
  will be claimed on the Resident Individual Income Tax return, Form IT-540, Schedule
  F, or the Nonresident and Part-Year Resident Individual Income Tax Return, Form IT-540B,
  Schedule F-NR. Partners and shareholders should apportion the credit based on each
  partner’s or shareholder’s percentage of ownership.

• 
  Corporation income or franchise tax credits — If the business providing
  the support is a corporation, the credit will be claimed on the Corporation Income
  and Franchise Tax Return, Form CIFT-620, Schedule RC.

• 
  Nonprofit Organizations — If the business providing the support is a nonprofit
  organization, the tax credit must be taken on the Corporation Income and Franchise Tax Return,
  Form CIFT-620, Schedule RC. Nonprofit organizations that are not registered with LDR because
  they are exempt from tax must register with LDR for corporation income tax and obtain a Louisiana
  revenue account number to be able to claim the credit.

5. Tax Credit For Donations To Resource And Referral Agencies—
R.S. 47:6107

Businesses may also receive a tax credit for donations made to Child Care Resource
and Referral Agencies. These are private agencies that contract with the Department
of Education to provide information and services to parents and child care
providers. The credit is equal to the amount donated but cannot exceed $5,000 per
tax year.

Taxpayers must attach a copy of the receipt from the child care resource or referral agency and if applicable,
a copy of the Schedule K-1 from the entity that made the donation to substantiate any credit earned from a pass-through entity.

The refundable credit can be taken against individual income tax, corporation income
tax, or corporation franchise tax depending on the business’s entity type as follows:

• 
  Individual income tax credit — If the business making the donation
  is owned by a sole proprietor or a flow-through entity such as a Limited Liability
  Company (LLC), Partnership, or Subchapter S corporation, the credit will be claimed
  on the Resident Individual Income Tax return, Form IT-540, Schedule F, or the Nonresident
  and Part-Year Resident Individual Income Tax Return, Form IT-540B, Schedule F-NR. Partners
  and shareholders should apportion the credit based on the each partner or shareholder’s
  percentage of ownership.

• 
  Corporation income or franchise tax credits — If the business making the donation
  is a corporation, the credit will be claimed on the Corporation Income and Franchise Tax Return,
  Form CIFT-620, Schedule RC.

• 
  Nonprofit Organizations — If the business making the donation is a nonprofit
  organization, the tax credit must be taken on the Corporation Income and Franchise Tax Return,
  Form CIFT-620, Schedule RC. Nonprofit organizations that are not registered with LDR because
  they are exempt from tax must register with LDR for corporation income tax and obtain a Louisiana
  revenue account number to be able to claim the credit.

What It Is, Who Can File, and How To Fill it Out

What Is Form 2441: Child and Dependent Care Expenses?

Form 2441, Child and Dependent Care Expenses, is an Internal Revenue Service (IRS) form used to report child and dependent care expenses on your tax return in order to claim a tax credit for those expenses. If you paid someone, whether it be an individual or a care facility, to look after a child or another qualifying dependent so you could work or look for work, you may be eligible to use it to claim a tax credit.

Key Takeaways

• IRS Form 2441 is completed by the taxpayer to report child and dependent care expenses paid for the year.
• This form must be filed if you’re planning to claim a credit for child and dependent care expenses.
• Completing Form 2441 doesn’t guarantee that you’re eligible for the child and dependent care tax credit as there are income limitations and qualifying person rules.
• The American Rescue Plan increased the tax credit to $4,000 for one qualifying individual and $8,000 for two or more qualifying individuals for 2021.
• Temporarily legislative changes are expected to rollback in future years, including the credit returning to its smaller amount and the credit potentially not being refundable.

Who Can File Form 2441?

The IRS spells out specific guidelines on who is eligible to claim the child and dependent care tax credit and what the credit is worth. Qualified care expenses, which include household services, were paid if you paid someone to care for a dependent in your home. Care expenses paid to a child or dependent care center also qualify. The following must be true.

• The amounts paid for care were paid so you could work or look for work. (The same applies to your spouse if you’re married and file a joint return.)
• The expenses were paid for an eligible dependent, which includes a qualifying child under 13, a disabled spouse, or another disabled individual whom you are able to claim as a dependent and for whom you paid care expenses.

Tax Credit vs. Tax Deduction

A tax credit decreases the amount of taxes owed to the IRS dollar for dollar. For example, if a taxpayer owed $3,000 in taxes and received a $2,000 tax credit, the tax liability would be $1,000 for that tax year. Conversely, a tax deduction reduces a person’s income, meaning there’s a lower amount of taxable income for that year. When the IRS applies the marginal tax rate (based on the person’s income tax bracket) a percentage of that income would be owed in taxes.

If the tax credit is refundable, it means any credit that exceeds the taxes owed is paid to the taxpayer as a refund. So, if the tax credit was $4,000 and the person owed $3,000 in taxes, the IRS would pay a refund of $1,000 to the taxpayer. If the tax credit is non-refundable, it means the person wouldn’t get a refund even if the tax credit exceeds the amount of taxes owed for that year. In other words, the best-case scenario with a non-refundable credit is that it reduces the tax liability to zero.

Child and Dependant Care Tax Credit

The American Rescue Plan, signed by President Biden on March 11, 2021, changed the Child and Dependent Credit for 2021. The Child and Dependent Credit is capped at 50% of eligible expenses up to $4,000 for one qualifying individual and $8,000 for two or more dependents for 2021 only.

The IRS calculates the tax credit amount based on the taxpayer’s total amount of work-related expenses reported to them. The maximum amount of work-related expenses that can be applied for one qualifying person is $8,000 and $16,000 for two or more qualifying persons. 

In other words, the tax credit cap of $4,000 represents 50% of the $8,000 maximum in work-related expenses for one qualifying person. Similarly, the tax credit cap of $8,000 represents 50% of the $16,000 maximum in work-related expenses for two or more qualifying persons.

The tax credit phases out and can be eliminated, depending on the income earned for the year. For 2021, the 50% tax credit begins to phase out if the taxpayer’s adjusted gross income is higher than $125,000 and completely phases out if it’s more than $438,000.

Also, the Child and Dependent Credit is refundable for 2021. In other words, even if the credit exceeds the amount of Federal income taxes owed, the person can claim the full credit amount, and the credit amount that exceeds the tax liability would be refunded to the taxpayer.

Special rules and qualification requirements exist for married filing separate taxpayers.

What Is Form 2441 Used for?

Form 2441 is used to figure the amount of child and dependent care expenses for which you may able to claim a tax credit. Filling out this form doesn’t guarantee that you’ll be eligible for the credit. Instead, it’s used to help you calculate what the credit may be worth to you if you qualify. You complete this form and attach it to Form 1040 when filing your taxes.

How to Fill Out and Read Form 2441: Child and Dependent Care Expenses

Form 2441 is a two-page document that requires you to include specific information about your dependents and child care expenses. It is broken into three parts.

Part I – Persons or Organizations Who Provided the Care

This section is where you enter information about the care provider, including the provider’s name, address, tax identification number (TIN), and the amount you paid for care. The IRS explicitly states that “if you don’t give correct or complete information, your credit (and exclusion, if applicable) may be disallowed”.

If you have more than three care providers to list, check the box above Line and attach the additional information to your return. The three highest paid care providers should be listed directly on the form, with any additional care providers listed on a separate statement.

A lot has changed over the years, as the 1960 version of Form 2441 was comprised to a single page with just 10 lines for a taxpayer to fill out.

Part II – Credit for Child and Dependent Care Expenses

Here you include the name(s) of any qualified person for whom you paid expenses, his or her tax ID number, and the amount of expenses paid. Similar to above, list the three qualifying people with the highest qualifying expenses on the form and supplement your return with a separate statement that includes information on additional people.

Line 8 references the phaseout of the tax credit based on an individual’s adjusted gross income. For a full table of the phaseout schedule including the decimal amount to enter on Line base on the input from Line 7, see the instructions to Form 2441. Certain taxpayers may receive a refundable portion of the tax credit. Taxpayers receiving a nonrefundable portion may need to complete the Credit Limit Worksheet on page 7 of the Form 2441 instructions.

Part III – Dependent Care Benefits

This is where you enter details about any dependent care benefits you receive for any of the qualifying persons you listed in Part II. The IRS provides a worksheet on page 10 of the Form 2441 instructions to calculate the credit you may claim for prior-year expenses paid in subsequent years. Line 27 through Line 31 is also required if you are claiming the credit for the child and dependent care expenses in Part II of the form.

IRS Form 2441, Page 1

IRS Form 2441, Page 1: Revised 2021.

Investopedia

IRS Form 2441, Page 2

IRS Form 2441, Page 2: Revised 2021.

Investopedia

All pages of Form 2441 are available on the IRS website. You can complete Form 2441 by hand, but it may be easier to use online tax filing software. For example, Box 10 of your W-2 will report the total amount of dependent care benefits that your employer paid on your behalf. By entering your W-2 into certain tax software programs, the program will automatically extract this information and transfer it to Form 2441.

Does IRS Verify Childcare Expenses?

The IRS may ask for verification of childcare expenses. Though every taxpayer will not be audited, filers must be prepared to show proof of expenses and that accurate underlying information (i. e. who care costs were paid to) were reported correctly.

What Are Qualified Expenses for IRS Form 2441?

Qualified expenses include amounts paid for household services and care of the qualifying person while you’re working or looking for work. Household services include a babysitter, housekeeper, or cleaning service if used to care for the qualifying person.

Where Can I Get Form 2441?

It’s important to remember that your child and dependent care providers won’t send this form to you. You’re responsible for completing it and filing it with your taxes. Again, if you’re using a tax software program to do that, you may have the option to fill it out electronically. If you need a paper copy, you can find Form 2441 on the IRS website.

Can Form 2441 Be E-Filed?

If you’re filing your tax return electronically, you can file Form 2441 along with your Form 1040. When selecting an e-filing tax program, check to make sure whether it asks questions about child and dependent care expenses.

Where Do I Mail Form 2441?

If you’re planning to file a paper return, you can fill out Form 2441 by hand and mail it with your return. The mailing address will depend on where you live. You can find a complete listing of mailing addresses for tax returns on the IRS website.

The Bottom Line

IRS Form 2441 is used to report child and dependent care expenses as part of your Federal income tax return. By reporting these expenses, you may be entitled to a tax credit up to $4,000 for one qualifying person or $8,000 for two or more qualifying people. The credit does not extend to individuals with an AGI over $438,000.

Documents

Details

Association of development and support of socio-educational initiatives and programs “Kindergarten and Family”

OGRN 1093500000747