Child and Dependent Care Credit or Early Childhood Development Credit

Line
24
Step
6
Step Subject
Refundable Credits and Payments
Instruction Year
2023

Only one of the following two credits may be claimed:

  • Child and Dependent Care Credit OR
  • Early Childhood Development Tax Credit

Only taxpayers with Iowa taxable income of less than $90,000 are eligible to take one of these refundable credits. If you are married filing jointly, your Iowa taxable income and the Iowa taxable income of your spouse must be combined to determine if you qualify.

Child and Dependent Care Credit

If you are choosing the Child and Dependent Care Credit, use the following worksheet and percentage table to calculate the credit. The percentages are based on your Iowa taxable income on line 4. You must include a copy of your completed federal form 2441. This credit may only be claimed for expenses actually paid by the taxpayer.

Child and Dependent Care Credit Worksheet

1. Enter the amount from federal form 2441, line 9c1.

2. If IA 1040, line 4 is:

Less than $10,000 enter 75%
$10,000 - $19,999 enter 65%
$20,000 - $24,999 enter 55%
$25,000 - $34,999 enter 50%
$35,000 - $39,999 enter 40%
$40,000 - $89,999 enter 30%
$90,000 and over: not eligible for credit

Enter the appropriate percent here.

2.______________________%
3. Multiply line 1 by percentage on line 2.
Enter the result here and on the IA 1040, line 24.		3.

Nonresidents and Part-year Residents

The Child and Dependent Care Credit must be adjusted using the following steps:

  1. Multiply the Iowa income percentage reported on the IA 126, line 27 by the amount of credit calculated in the worksheet, line 3.
  2. Enter this amount on the IA 1040, line 24.

Married Separate Filers:

Generally, you may not take this credit if your filing status is married filing separately. See IRS Publication 503 for more information. 

Early Childhood Development Credit

If you are choosing the Early Childhood Development Credit, you may take the credit equal to 25% of the first $1,000 of qualifying expenses paid in 2023 for each dependent from the ages of three through five.

Expenses that qualify include the following:

  • Services provided by a preschool, as defined in Iowa Code section 237A.1
  • Books that improve child development, such as textbooks, music and art books, teacher's editions, and reading books
  • Instructional materials required to be used in a lesson activity, such as paper, notebooks, pencils, and art supplies
  • Lesson plans and curricula
  • Child development and educational activities outside the home, such as drama, art, music and museum activities, and the entrance fees for such activities

Early childhood development expenses that do NOT qualify include:

  • Food, lodging, or membership fees relating to child development and educational activities outside the home
  • Services, materials, or activities for the teaching of religious tenets, doctrines, or worship, if the purpose of these expenses is to instill those tenets, doctrines, or worship

Nonresidents and part-year residents

The Early Childhood Development Credit must be adjusted using the following steps

  1. Multiply the Iowa income percentage reported on the IA 126, line 27 by the amount of the credit. 
  2. Enter this amount on the IA 1040, line 24.

Married Separate Filers:

This credit must be taken by the spouse claiming the dependent. The $90,000 income limitation only applies to the income of the taxpayer and does not include their spouse’s income.

 

Go to Line 23

Go to Line 25