§ 422.12C — Child and dependent care or early childhood development tax credits

Iowa § 422.12C

• Jurisdiction: Iowa
• Title X: FINANCIAL RESOURCES
• Ch. 422: INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES

Text

1. The taxes imposed under this subchapter, less the amounts of nonrefundable credits
allowed under this subchapter, shall be reduced by a child and dependent care credit equal to
the following percentages of the federal child and dependent care credit provided in section
21 of the Internal Revenue Code, without regard to whether or not the federal credit was
limited by the taxpayer’s federal tax liability:
a. For a taxpayer with net income of less than ten thousand dollars, seventy-five percent.
b. For a taxpayer with net income of ten thousand dollars or more but less than twenty
thousand dollars, sixty-five percent.
c. For a taxpayer with net income of twenty thousand dollars or more but less than
twenty-five thousand dollars, fifty-five percent.
d. For a taxpayer with net income of twenty-five thousand dollars or more but less than
thirty-five thousand dollars, fifty percent.
e. For a taxpayer with net income of thirty-five thousand dollars or more but less than
forty thousand dollars, forty percent.
f. For a taxpayer with net income of forty thousand dollars or more but less than ninety
thousand dollars, thirty percent.
g. For a taxpayer with net income of ninety thousand dollars or more, zero percent.
2. a. The taxes imposed under this subchapter, less the amounts of nonrefundable
credits allowed under this subchapter, may be reduced by an early childhood development
43 INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES, §422.12E
tax credit equal to twenty-five percent of the first one thousand dollars which the taxpayer
has paid to others for each dependent, as defined in the Internal Revenue Code, ages three
through five for early childhood development expenses. In determining the amount of
early childhood development expenses for the tax year beginning in the 2006 calendar year
only, such expenses paid during November and December of the previous tax year shall be
considered paid in the tax year for which the tax credit is claimed. This credit is available
to a taxpayer whose net income is less than ninety thousand dollars. If the early childhood
development tax credit is claimed for a tax year, the taxpayer and the taxpayer’s spouse
shall not claim the child and dependent care credit under subsection 1.
b. As used in this subsection:
(1) “Earlychildhooddevelopmentexpenses” means services provided to the dependent by
a preschool, as defined in section 237A.1, materials, and other activities as follows:
(a) Books that improve child development, including textbooks, music books, art books,
teacher’s editions, and reading books.
(b) Instructional materials required to be used in a child development or educational
lesson activity, including but not limited to paper, notebooks, pencils, and art supplies.
(c) Lesson plans and curricula.
(d) Child development and educational activities outside the home, including drama, art,
music, andmuseumactivities, andtheentrancefeesforsuchactivities, butnotincludingfood
or lodging, membership fees, or other nonacademic expenses.
(2) “Early childhood development expenses” does not include services, materials, or
activities for the teaching of religious tenets, doctrines, or worship, the purpose of which is
to inculcate those tenets, doctrines, or worship.
3. Any credit in excess of the tax liability shall be refunded. In lieu of claiming a refund, a
taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return
credited to the tax liability for the following taxable year.
4. Nonresidents or part-year residents of Iowa must determine their Iowa child and
dependent care credit under subsection 1 or the early childhood development tax credit
under subsection 2 in the ratio of their Iowa source net income to their all source net income.