SB 311

This bill creates a nonrefundable individual income tax credit for certain

expenses for household and dependent care services, based on a similar federal

credit.

Under current federal law, there exists a tax credit for expenses for household

and dependent care services necessary for gainful employment. Generally, the

federal credit is a nonrefundable individual income tax credit that may be claimed

by an individual for employment-related expenses for household services and

dependent care services for a qualifying individual. Because the credit is

nonrefundable, it may be claimed only up to the amount of a taxpayer's tax liability.

Generally, under federal law, a qualifying individual is someone who has the

same principal place of abode as the claimant for more than one-half the year, is the

claimant's dependent, and is: 1) a child 12 or under; 2) a child 13 or older who is

incapable of self-care; or 3) the claimant's spouse who is incapable of self-care.

The credit may be claimed for expenses to enable the claimant to be gainfully

employed or actively search for gainful employment. Generally, allowable expenses

for a qualifying individual under federal law include costs for in-home care or

daycare, nursery school or preschool programs, and before-school and after-school

care for school-age children. Depending on the claimant's adjusted gross income, the

credit may be worth between 20 percent and 35 percent of the claimant's allowable

expenses, up to a maximum annual amount of $3,000 if there is one qualifying

individual and up to $6,000 if there are two or more qualifying individuals.

This bill creates a nonrefundable individual income tax credit based on the

federal tax credit for expenses for household and dependent care services. Under the

bill, an individual who is eligible for and claims the federal tax credit for expenses

for household and dependent care services may claim the same amount as a

nonrefundable credit on his or her Wisconsin income tax return. Under the bill, the

Wisconsin credit may not be claimed by a part-year or nonresident of this state.