You may qualify to take either the Child and Dependent Care Credit or the Early Childhood Development Credit if your combined (if applicable) net income is below $45,000. Taxpayers that are not required to file an Iowa return will need to do so to claim the credit. Only one of the following credits may be claimed.
Child Dependent Care Credit
To claim the Child Dependent Care Credit, you must have completed the Child and Dependent Care Expenses (form 2441) in the federal section of your return.
The program will automatically pull the information to the state return and calculate this credit for you unless you select the Early Development Tax Credit.
Early Childhood Development Credit
The credit is equal to 25% of the first $1,000 of qualifying expenses paid during the tax year for each dependent age 3-5.
Qualifying expenses include preschool, books, materials (such as paper, pencils, etc.), lesson plans, and activities (such as music and art). Do not include any amounts paid for food, lodging or religious materials.
To elect to take the Early Development Tax Credit instead, follow the steps below:
- State Section
- Early Childhood Development Credit
- Select "yes" and enter the credit amount into the return