The Minnesota Child and Dependent Care Credit helps offset certain care expenses if you were working or looking for work and your income is below a certain level. This credit is refundable, which means you can receive a refund even if you don’t owe income tax.
To qualify for the Minnesota Child and Dependent Care Credit, you must be eligible for the federal credit (see IRS Publication 503
) and meet these state requirements:
- The care expenses must be for one or more “qualifying persons.”
- The “qualifying person” must have lived with you for more than half the year.
- You (and your spouse if married) must have earned income (except as noted in the 7th bullet in this list).
- You must have paid the expenses so that you (and your spouse if married) could work or look for work (except as noted in the 7th bullet in this list).
- You must file as single, head of household, qualifying widow(er) or, if you’re married, you must file a joint tax return. (Married taxpayers who file separately can’t receive the Minnesota credit.)
- Your household income must be $39,510 or less for 2016. For a list of what income to include, see Household Income for Income Tax Credits and the Property Tax Refund.
- At least one of the following must apply to you.
- You paid someone else for child or dependent care assistance. If the caregiver is your child, they can’t be your dependent and must be age 19 or older by the end of the year
- You ran a licensed family daycare program in your home and provided care for your own child, who was younger than age 6 at the end of the year.
- For married couples, you had or adopted a child born during the current tax year, filed a joint return, and didn’t participate in a pre-tax dependent care assistance program. You may qualify even if you had no child care expenses, or if only one spouse had earned income.
Part-Year Residents, Nonresidents, American Indians and JOBZ Subtraction Change
Since the state credit is based on income that’s taxable to Minnesota, you must adjust (“prorate”) your credit amount if you are:
Make the adjustment as directed on Schedule M1CD.
Minnesota doesn’t tax active-duty pay for military members serving outside the state, but you must include this pay in your household income. If your military pay is included in your adjusted gross income (AGI) you do not have to make an adjustment on Schedule M1CD
. If your military pay is not included in your AGI, you must include it as “additional nontaxable income” when calculating the Minnesota credit. You don’t have to separately adjust (“prorate”) your credit amount.
No Credit for Deceased Taxpayer
A taxpayer must be alive when filing their state return and Schedule M1CD to claim the Minnesota credit. If they die after filing, the credit will be paid to a member of their household or a personal representative. But if they die before filing, the credit can’t be claimed on their tax return.
Except as noted below, Minnesota uses the federal definition for “qualifying person”.
Minnesota’s definition is different in the following ways:
Expenses That Qualify
The expenses that qualify for the Minnesota Child and Dependent Care Credit are the same as for the federal credit. This includes payments for household services and care of a “qualifying person” that are needed to allow you (and your spouse if married) to work or look for work.
The following costs are not eligible:
- Food, clothing, education or entertainment – unless they are provided as part of the care and can’t be separated from other care expenses.
- Payments made for you by another person or government agency.
Note: You may claim up to $3,000 in qualifying expenses for one child, or $6,000 for two or more children.
Documentation of Expenses
Married Taxpayers With a Child Born During the Tax Year
If you and your spouse had or adopted a baby born during the tax year, you may claim the lesser of $3,000 or your combined earned income as expenses. This is true no matter how much you actually paid in expenses or how many children were born. See “Requirements” (above) for details on eligibility.
You must check the box on Schedule M1CD to indicate that you’re claiming the credit for a baby born during the tax year. Use the worksheet in the form instructions to determine the amount of your credit if your federal credit for the child was based on less than $3,000 of expenses.
Licensed Family Daycare Providers Who Care for Their Own Child
If you care for your own child in your licensed family daycare home, you may still qualify for this credit if your child was younger than age 6 at the end of the tax year. See “Requirements” (above) for details on eligibility.
The amount you may claim for qualifying expenses depends on your child’s exact age at the end of the tax year, as follows :
- Younger than 16 months old: $3,000 (or $6,000 for two or more children).
- Between 16 months and 6 years old: The amount you normally would have charged to care for that child for the same number of hours, up to $3,000 (or $6,000 for two or more children).
You must check the box on Schedule M1CD
to indicate that you’re a licensed provider caring for your own child(ren) and provide your daycare license number.