Maryland taxpayers can get more tax rebates this year if they claim a little-known rebate. This credit, called the Child and Dependent Care Credit from Maryland, is based on the federal child and dependent care credit. This credit is only for residents eligible for a Child and Dependent Care Credit on their federal income tax return.
Child and Dependent Care Credit from Maryland: who gets it and how much?
Maryland residents who are eligible for a federal Child and Dependent Care Credit can get up to $512 in the form of the Child and Dependent Care Credit from Maryland. Additionally, families need to have a child aged 17 or younger who lived with them for more than half the year to qualify for this Child and Dependent Care Credit.
Another requirement is that the taxpayer must have claimed the child as a dependent. Visit the IRS website for more information on requirements. It must be noted that the credit is in addition to the subtraction modification that is available to Marylanders for child and dependent care expenses.
The amount of credit varies depending on the federal child tax credit and the taxpayers’ income. Marylanders with an income of $30,000 or less ($50,000 or less for married couples) and who qualify for the full federal credit of $1,600 can get an additional 32% of their federal payout.
So, a family with one eligible child can get $512 in addition to the federal credit of $1,600. The percentage varies with income, with wealthier taxpayers getting less. For instance, individuals with income more than $30,000 but less than $32,000 will receive 31.68% of the federal credit.
There is no credit for those with income more than $102,600 ($159,500 for married filing joint income tax returns). Visit Maryland’s tax website to calculate your Child and Dependent Care Credit from Maryland.
How to claim
To claim the Child and Dependent Care Credit from Maryland, taxpayers need to complete Part B of Form 502CR and submit it along with their Maryland income tax return. Taxpayers need to report the credit they receive on Maryland Form 502, 505 or 515.
If the credit amount is more than the taxpayer’s tax liability and the federal AGI (adjusted gross income) of the taxpayer is less than $55,750 ($83,650 for married couples filing jointly), the taxpayer could be entitled to claim a refund of any excess credit.
Separately, lawmakers in February last year made changes to the state Child and Dependent Care Credit program to restrict it to residents only. Prior to the change, the language of the program allowed nonresidents with zero Maryland income and filing nonresident returns to claim a refund of the Child and Dependent Care Credit from Maryland.
Since such nonresidents had $0 Maryland tax liability, the full credit they qualified for was refundable. Lawmakers closed this loophole to ensure the credit goes only to residents.
