Category: MN Credits
MN M1CD, Child and Dependent Care Credit
The qualified expenses and qualifying persons are the same for the Minnesota credit as for the federal credit for child and dependent care expenses. This information is automatically carried to your state return. There are a few differences and exceptions to the calculation of the credit.
Who is Eligible?
If you paid someone (other than your dependent child or step-child younger than age 19) 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 (on this page).
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 schedule, you must complete federal Form 2441 even if you did not claim the federal credit or file a federal return.
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 credit, you will be assessed a penalty equal to 50 percent of the fraudulently claimed credit.
You Must Have Proof
Save canceled checks and/or keep a detailed record of your payments for child and dependent care expenses. The 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 to determine your credit.