Purpose of the Bill

The bill aims to provide financial relief to family members who take care of children under six years old by offering a refundable tax credit. This initiative encourages family-based child care, enabling parents or guardians to remain employed.

Main Provisions

• Refundable Tax Credit: Qualifying family members who provide child care to relatives can receive a $2,000 tax credit.
• Eligibility Criteria:
  • Must be a family relative by blood or marriage, such as a grandparent, sibling, uncle, aunt, or cousin.
  • Must provide at least 416 hours of child care in a year without receiving payment, ensuring the child's parent or guardian can work.
  • Cannot live in the same residence as the child and must be exempt from needing a child care license.
• Income Phaseout: The tax credit decreases by 10% for incomes above specific thresholds: $100,000 for joint filers and $50,000 for other taxpayers.
• Record Keeping: Caregivers must maintain precise records of the care hours for credit eligibility.
• Refund Provision: If the tax credit surpasses the caregiver's tax liability, the excess amount will be refunded by the state.

Significant Changes

This bill introduces a new legal provision in Minnesota Statutes chapter 290 to support unpaid family caregivers with a tax credit, which is a departure from existing tax credits primarily focused on licensed providers.

Relevant Terms

family child care, refundable tax credit, qualifying caregiver, qualifying relative, adjusted gross income, income phaseout, nonresident taxpayer, part-year resident, child care licensing exemption.