Do You Qualify For The Maine Childcare Tax Credit?

Can you believe we are on the verge of tax filing season? I know some people like to wait until mid-April and file at the last minute. Me? I like to file as soon as possible and get it over with, and so does my CPA.

And, especially if you don't use a CPA, both the federal and state of Maine tax codes can cause confusion for the smartest Mainers. That's why I did a little research about a specific Maine tax credit.

This tax credit, while available on a federal level, is also offered in Maine as a state credit as well. Of course, we're talking about the Maine Childcare Credit. But how do you know if you qualify?

Maine.Gov indicates that the credit amount is generally 25% of the federal child and dependent care credit. If your child attends a quality child care provider—defined as a provider with a Quality Certificate

According to Maine.Gov,  the credit increases 50% of the federal credit. This means that the state credit is refundable up to $500, meaning if the credit exceeds your tax liability, you can receive a refund up to this amount, but not more. Confused yet?

To claim this credit, Mainers must complete the appropriate section on your Maine state income tax return, providing details of your child care expenses and information about the child care provider. BUT, make sure you keep records and receipts of your child care expenses and verify whether your provider holds a Quality Certificate to maximize your potential credit.

Additionally, you must qualify for the federal Child and Dependent Care Credit, which requires that you have earned income and have paid for child care expenses to enable you (and your spouse, if ya file jointly) to work OR actively look for work.

According to the Maine tax form, 1040ME, the expenses must be for the care of a qualifying individual, typically a dependent child under the age of 13, and the care must be provided so you can work or seek employment.

Now keep in mind, you must be a resident, part-year resident or nonresident taxpayer with Maine-based income to claim the credit on your Maine state tax return. There is no specific income threshold that disqualifies you from claiming the federal credit, however, the credit amount decreases as your income increases. Get it?

If, like me, this kind of stuff confuses the ever-loving heck out of you, you can always call 211 to find a free tax preparation service near you. You definitely don't want to leave any cash on the table, especially in this economy.