Citations Affected: IC 6-3.1-34; IC 12-17.2-2-14.
Synopsis: Tax credit for quality child care. Establishes the paths to
quality income tax credit. Provides that an individual is entitled to a
refundable income tax credit for each dependent child of the individual
attending a child care facility that voluntarily participates in the paths
to quality rating system (qualified child care facility) and that has a
quality rating of level 2 or higher. Provides that the amount of the
credit is based on the number of months the dependent child attends the
qualified child care facility and the quality rating of the qualified child
care facility. Requires the division of family resources to adopt rules to
administer the paths to quality rating system.
Effective: Upon passage; January 1, 2014.
January 7, 2013, read first time and referred to Committee on Tax and Fiscal Policy.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
refers to the parent who is eligible to take the exemption for the
child under Section 151 of the Internal Revenue Code.
Sec. 3. As used in this chapter, "division" refers to the division
of family resources established under IC 12-13-1-1.
Sec. 4. As used in this chapter, "paths to quality program"
refers to the program established by IC 12-17.2-2-14.
Sec. 5. As used in this chapter, "qualified child care facility"
means a child care facility that voluntarily participates in the paths
to quality program.
Sec. 6. As used in this chapter, "qualified dependent child"
means a dependent child who attends a qualified child care facility
that receives a level 2 through level 4 quality rating.
Sec. 7. As used in this chapter, "quality rating" means the level
number awarded to a qualified child care facility under the quality
rating system.
Sec. 8. As used in this chapter, "quality rating system" means
the quality rating system established by the division under
IC 12-17.2-2-14(c).
Sec. 9. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under IC 6-3-1
through IC 6-3-7 (the adjusted gross income tax), as computed
after the application of the credits that under IC 6-3.1-1-2 are to be
applied before the credits provided in this chapter.
Sec. 10. As used in this chapter, except as provided in section 2
of this chapter, "taxpayer" means an individual.
Sec. 11. (a) Each taxable year, a taxpayer is entitled to credit
against the taxpayer's state tax liability for each qualified
dependent child of the taxpayer who regularly attends a qualified
child care facility during the taxpayer's taxable year if the
qualified child care facility has a quality rating of level 2, level 3,
or level 4. If the amount of the credit provided by this section to a
taxpayer during a particular taxable year exceeds the sum of the
taxes imposed on the taxpayer under IC 6-3 for the taxable year
after the application of all credits that under IC 6-3.1-1-2 are to be
applied before the credit provided by this chapter, the excess shall
be returned to the qualifying taxpayer as a refund.
(b) The amount of the credit to which a taxpayer is entitled for
each qualified dependent child equals the STEP TWO total in the
following formula:
STEP ONE: For each month in which the qualified dependent
child attends the qualified child care facility for at least one
hundred (100) hours, determine the monthly credit amount
under subsection (c) based on the quality rating of the
qualified child care facility for that month.
STEP TWO: Determine the sum of the amounts calculated
under STEP ONE for each month during the taxpayer's
taxable year.
(c) The monthly credit amount for a qualified dependent child
who attends a qualified child care facility at least one hundred
(100) hours during that month equals the following:
(1) If the qualified dependent child attends a qualified child
care facility with a quality rating of level 4, thirty-two dollars
($32).
(2) If the qualified dependent child attends a qualified child
care facility with a quality rating of level 3, twenty-five
dollars ($25).
(3) If the qualified dependent child attends a qualified child
care facility with a quality rating of level 2, sixteen dollars
($16).
The quality rating for a qualified child care facility for the month
in which the quality rating for the facility changes is the lower
quality rating assigned to the qualified child care facility during
that month.
Sec. 12. Not later than January 15 of each year, the division
shall send a letter to each qualified child care facility certifying the
quality rating awarded to the qualified child care facility for each
month during the previous calendar year.
Sec. 13. To receive a credit under section 11 of this chapter, a
taxpayer must claim the credit on the taxpayer's annual state tax
return or returns in the manner prescribed by the department. The
taxpayer shall submit to the department all information that the
department determines is necessary to validate eligibility and
calculate a credit provided under section 11 of this chapter.
Sec. 14. The department, with the advice of the division, shall
adopt rules under IC 4-22-2 to administer this chapter.