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:

Percentage of Deduction from Child Care Facility Rating Quality Rating of Child Care Facility Percent of Louisiana Child Care Tax Credit Five Star 200% Four Star 150% Three Star 100% Two Star 50% One Star or not participating in Quality Start 0%

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.