Minnesota Child and Dependent Care Credit
Who is Eligible
If you paid someone to care for your child or other qualifying person so that you (and your spouse, if filing a joint return) could work or look for work, you may be eligible for a credit based on your qualified expenses. You must have had earned income to take this credit.
Qualified expenses and qualifying person are the same as for the federal credit for child and dependent care expenses. Exceptions: If Your Child was Born in 2015 (see instructions below ) and Operators of Licensed Family Day Care Homes (see instructions below).
To qualify for the credit, all of the following statements must be true:
- your household income is $39,400 or less (complete lines 1 through 6 of Schedule M1CD to determine household income),
- you are single, head of household, qualifying widow(er) or married filing a joint return (married persons filing separate returns do not qualify), and
- the qualifying person lived with you for more than one-half of the year.
The Minnesota credit is refundable, which means you may benefit from the credit even if you have no state tax liability. This is different from the federal credit which can be used only to offset tax. Before you complete this entry, you must complete federal Form 2441—even if you did not claim the federal credit or file a federal return.
Note: Nonresidents and part-year residents may be eligible for this credit, which is prorated by the percentage of earned income taxable to Minnesota.
A qualifying person is the same as for the federal credit for child and dependent care expenses. A qualifying person is your dependent child younger than age 13, your disabled spouse or a dependent who is disabled.
If you were divorced, legally separated or lived apart from your spouse during the last six months of 2015 and your child is not your dependent, you may take the credit if your child meets the requirements of a qualifying person for the federal credit for child and dependent care expenses. In this case, the other parent cannot treat the child as a qualifying person.
Qualified expenses are amounts paid for household services and care of the qualifying person while you (and your spouse, if filing a joint return) worked or looked for work. The person who provided the care could not be your spouse or a person you can claim as a dependent. If your child provided the care, he or she must have been age 19 or older. The expenses are the same as those that qualify for the federal credit for child and dependent care expenses. Payments made for you by another person or agency do not qualify.
Even if you did not have actual child care expenses, you may still be eligible if you meet one of the following conditions:
- you are married and filing a joint return, your child was born in 2015, and you did not participate in a pre-tax dependent care assistance program, or
- you were an operator of a licensed family day care home caring for your own child who had not reached the age of six years at the end of the year.
Penalty for Fraudulently Claiming a Refund
If you file a return that fraudulently claims a refund, you will be assessed a penalty. The penalty is 50% of the fraudulently claimed refund.
You Must Have Proof
Save canceled checks and/or keep a detailed record of your payments for child and dependent care expenses. The Revenue Department may ask you to show such records if there is any question concerning your Child and Dependent Care Credit.
If Your Child was Born in 2015
A married couple filing a joint return and having a child born in 2015 may claim a child care credit if they did not participate in a pre-tax dependent care assistance program. They may be eligible even if they did not have actual child care expenses or if only one spouse had earned income. The credit for the newborn is based on $3,000 of qualified expenses (even if your actual expenses were less than $3,000) or the couple’s combined earned income, whichever is smaller. If your child care expenses for the child born in 2015 are less than $3,000, complete the worksheet on Form M1CD to determine your credit.
Operators of Licensed Family Day Care Homes
Operators of licensed family day care homes can claim a child care credit when they care for their own child if the child had not reached the age of six years at the end of 2015. If the child was 16 months or younger at the end of 2015, the credit is based on $3,000 of qualified expenses ($6,000 if there are two children age 16 months or younger). If, at the end of the year, a child was older than 16 months but younger than age six, the credit is based on the amount the provider would charge for a child of the same age being cared for in the home for the same number of hours (up to the maximum amounts).
To correctly determine your credit, you must complete a separate federal Form 2441 using the above qualified expense amounts instead of any expenses you actually paid. Include the recomputed Form 2441 you used to determine your Minnesota credit when you file Form M1.