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PAG LIN
1 1 Section 1. NEW SECTION. 422.12F DEPENDENT CARE TAX
1 2 CREDIT – REFUND.
1 3 1. The taxes imposed under this division, less the credit
1 4 allowed under section 422.12 and other nonrefundable credits,
1 5 shall be reduced by a dependent care tax credit for married
1 6 taxpayers where one spouse is not gainfully employed for more
1 7 than one hundred four hours during each calendar quarter
1 8 during the tax year and that spouse provides household
1 9 services and care for a qualifying individual. The credit is
1 10 also available to an unmarried head of household where the
1 11 head of household is not gainfully employed for more than one
1 12 hundred four hours during each calendar quarter during the tax
1 13 year and the head of household provides household services and
1 14 care for a qualifying individual. An individual who has net
1 15 earnings from self-employment which are subject to the self-
1 16 employment tax under the federal Social Security Act of six
1 17 hundred dollars or more during a calendar quarter or two
1 18 thousand four hundred dollars or more during a calendar year
1 19 is considered gainfully employed for more than one hundred
1 20 four hours during a calendar quarter. The amount of the
1 21 credit shall be computed as follows:
1 22 a. Calculate a provisional credit equal to the product of
1 23 the applicable percentage and the household services and care
1 24 expenses.
1 25 b. Calculate the actual credit as follows:
1 26 (1) For a taxpayer with net income of less than ten
1 27 thousand dollars, seventy-five percent of the provisional
1 28 credit.
1 29 (2) For a taxpayer with net income of ten thousand dollars
1 30 or more but less than twenty thousand dollars, sixty-five
1 31 percent of the provisional credit.
1 32 (3) For a taxpayer with net income of twenty thousand
1 33 dollars or more but less than twenty-five thousand dollars,
1 34 fifty-five percent of the provisional credit.
1 35 (4) For a taxpayer with net income of twenty-five thousand
2 1 dollars or more but less than thirty-five thousand dollars,
2 2 fifty percent of the provisional credit.
2 3 (5) For a taxpayer with net income of thirty-five thousand
2 4 dollars or more but less than forty thousand dollars, forty
2 5 percent of the provisional credit.
2 6 (6) For a taxpayer with net income of forty thousand
2 7 dollars or more, zero percent of the provisional credit.
2 8 2. For purposes of this section:
2 9 a. "Applicable percentage" means the same as defined in
2 10 section 21(a)(2) of the Internal Revenue Code.
2 11 b. "Household services and care expenses" equals two
2 12 thousand four hundred dollars if there is only one qualifying
2 13 individual, and four thousand eight hundred dollars if there
2 14 are two or more qualifying individuals.
2 15 c. "Qualifying individual" means the same as defined in
2 16 section 21(b)(1) of the Internal Revenue Code.
2 17 3. Any credit in excess of the tax liability shall be
2 18 refunded. In lieu of claiming a refund, a taxpayer may elect
2 19 to have the overpayment shown on the taxpayer's final,
2 20 completed return credited to the tax liability for the
2 21 following taxable year.
2 22 4. The credit is only available to married taxpayers
2 23 filing jointly and unmarried heads of household. A taxpayer
2 24 shall not claim a credit under this section and section
2 25 422.12C for the same tax year. Nonresidents or part-year
2 26 residents of Iowa must determine their Iowa dependent care tax
2 27 credit in the ratio of their Iowa source net income to their
2 28 all source net income.
2 29 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies
2 30 retroactively to January 1, 2001, for tax years beginning on
2 31 or after that date.
2 32 EXPLANATION
2 33 This bill provides a refundable tax credit under the
2 34 individual income tax for a spouse or unmarried head of
2 35 household who remains at home to provide household services
3 1 and care for a dependent and who is not gainfully employed for
3 2 more than 104 hours during each calendar quarter during the
3 3 tax year. Net earnings from self-employment of at least $600
3 4 in a calendar quarter or $2,400 in a calendar year is
3 5 considered gainfully employed for more than 104 hours during a
3 6 calendar quarter. The computation of the amount of the credit
3 7 is patterned after the method for computing the federal credit
3 8 available for persons who incurred expenses for household and
3 9 dependent care services so that they may be gainfully employed
3 10 and patterned after Iowa's child and dependent care credit,
3 11 which is a percentage of that federal credit.
3 12 The bill applies retroactively to January 1, 2001, for tax
3 13 years beginning on or after that date.
3 14 LSB 1270XS 79
3 15 mg/cf/24
Text: SF00086 Text: SF00088 Text: SF00000 - SF00099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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