You must complete the federal credit, Form 2441, even if you aren't eligible to claim the federal credit. Save canceled checks and itemized receipts showing your payments for child and dependent care expenses. The state may ask you to show these records if they have questions.
Who is Eligible?
If you (and spouse, if filing joint return) had earned income, based on your qualified expenses, you may be eligible for this credit. Documentation must be available that shows the expenses were paid to someone for at least one of the following:
- To care for your child or other qualifying person
- For household services.
All of the following must be true, to qualify for the credit:
- Your federal adjusted gross income (AGI) is less than $67,300 with one (1) qualifying person or less than $79,300 with two (2) or more qualifying persons,
- Married Filing Separately is not your filing status,
- For more than one-half of the year, the qualifying person lived with you.
The Minnesota credit is refundable, unlike the federal credit which is only used to offset tax liability. This means even if you have no state tax liability, you may benefit from the credit;
Part-year and nonresidents, based on their prorated percentage of earned income which is taxable to Minnesota, might be eligible for this credit.
Who is considered a Qualifying Person?
Any person who meet the requirement for the federal credit for this same credit is considered a qualifying person. A qualifying person, generally, lived with you for more than one-half of the year and is one of the following:
- dependent child, younger than 13, or
- disabled spouse or dependent.
If legally separated, divorced, or lived apart from your spouse, during the last six months of the tax year and the child is not your dependent, you are eligible for the credit if the child meets the requirements as a qualifying person to be eligible for the federal credit for child and dependent care expenses. The other parent cannot treat the child as a qualifying person if you claim the child as a qualified person for this credit.
What if my child was born in 2022?
Even if you didn't have actual expenses for a child born in 2022, or only one spouse had earned income; you may calculate your credit using $3,000 for expenses.
All of the following requirements must be met:
- Married, filing a joint return
- Child (or children) born in 2022
- Less than $3,000 in child care expenses or one spouse earned less than $3,000
- Neither you nor your spouse participated in a pre-tax dependent care assistance program.
To determine your credit, complete the worksheet found here.
If both your actual childcare expenses for the child and the lesser earning spouse’s income were $3,000 or more ($6,000 if you have two or more qualifying children), do not complete the worksheet. Use your actual expenses to claim this credit.
For additional information, please See Schedule M1CD.