Help Us Fight Back Against Efforts to Roll Back Gender Justice
Extremist judges will not stop endangering the lives of pregnant people or people who may become pregnant—overturning Roe v. Wade, attacking medication abortion, threatening the future of IVF, and this week at SCOTUS, emergency abortion care.
Our lawyers are waging strategic fights that make clear what is at stake for people who can become pregnant and seek to bolster our fundamental rights to control our lives, futures, and destinies.
Make a donation to the National Women’s Law Center to power the fight for accessible health care and a better future for all. Every donation is 100% tax-deductible.
How States Are Making Care Less Taxing in Tax Year 2019
I filed my Tax Year 2019 tax returns—but perhaps you haven’t yet. If you paid child or dependent care expenses in 2019, orifyou’re a child care provider or advocate who knows families that did, pay attention!
We know that many parents struggle to afford high-quality, affordable child care. The federal Child Care and Development Block Grant (CCDBG) can help families pay theirchild care bills throughout the year, butinsufficient funding means that only a fraction of eligible children receive CCDBG assistance.So for some families,tax provisions for child and dependent care expenses can help.The federal government and most states have some type of child and dependent care (CADC) tax provision.
Tax forms can seem full of jargon, so let’s help break down at least one part of them. CADC tax provisions help lower the amount of taxes some families owe and sometimes provide tax refunds. CADC tax provisions can be tax credits—refundable or non-refundable—or tax deductions. Here’s how they work:
Refundable credits lower the amount of taxes a family owes by a set amount. If the credit amount is higher than the family’s income tax liability, theyprovide a refund.
Non-refundable credits lower a family’s income tax liability by a set amount but don’t provide refunds. If thatcredit amount is greater than their income tax liability, then they don’t get any money back from the IRS. The federal Child and Dependent Care Tax Credit is an example of a nonrefundable CADC credit.
Tax deductions reduce a family’s taxable income, which then lowers their tax liability. The deduction value depends on the family’s tax rate, so they’re worth less for families with lower incomes, and more for families with higher incomes and higher tax rates. They are worth absolutely nothing to families who don’t owe any income tax.
When you file federal and state returns, make sure you claim your CADC tax credit or deduction, if you can. Check our mapto find out if your state has a CADC tax provision.
But before youget started on your taxes, we want to flag changes to state CADC tax provisions for Tax Year 2019:
Several states increased the value of their CADC credit!Coloradoincreased the value of its Child Care Expense Tax Credit for moderate-income families. Families with a federal Adjusted Gross Income (AGI) of $60,000 or less can now access a 50 percent match of the federal credit they receive.Kansas increased its CADC credit from a 12.5 percent (2018)to 18.75 percent (2019) match.
Colorado extended its Low-Income Child Care Expenses Credit for eight more years, through Tax Year 2028 (filed in 2029).This is a big win for low-income families!
The District of Columbia made its Keep Child Care Affordable Tax Credit permanent. This credit is worth up to $1,000 per eligible childbut isn’t tailored to assist low-income families. More funding for direct assistance through the Birth-to-Three for All DC Act of 2018and/or making itsother child care creditrefundable would significantly help low-income families who need the most help accessing child care.
Maryland made its Credit for Child and Dependent Care Expenses refundable for families with incomes of $50,000 or less—$75,000 for filers who are married and filing jointly—and increased the credit amount and income limits. Estimates show that more than 90,000 additional families would be able to claim the credit.
Massachusetts has a deduction, not a credit, for child and dependent care expenses. Massachusetts reduced its individual income tax rate down to 5.05%, which lowered the maximum value of the deduction to $242 for one child or dependent and $485 for two or more children or dependents.
Twostateshave annual changes to CADC tax credits built into their statutes.Minnesota increases its CADC tax credit income thresholds for inflation each year. Oregon makes its Working Family Household and Dependent Care Credit available tofamilies making 300 percent or below of the Federal Poverty Level (FPL). Each year, the FPL changes. So, the dollar threshold for the cutoff is higher than last year.
That’s our roundup of state CADC tax provision changes for Tax Year 2019! In addition to tax benefits for child and dependent care expenses, families could also qualify for the federal and state Earned Income Tax Credits and the Child Tax Credit. Families need all the help they can topay for everyday expenses, so don’t miss out on the opportunity to take advantage of these tax provisions!