Report Title:
Tax Credit; Child Care
Description:
Provides a child care tax credit to employers that provide child care service reimbursements to employees or provide a child care facility at no charge to employees.
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THE SENATE |
S.B. NO. |
858 |
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TWENTY-FIRST LEGISLATURE, 2001 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CHILD CARE TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Dependent care tax credit. (a) There shall be allowed to each employer taxpayer subject to the tax imposed under this chapter, a dependent care tax credit that shall be applied against the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.
(b) The dependent care tax credit shall be:
(1) per cent of the cost paid or incurred by an employee for contributions to a qualified care plan made on behalf of any dependent of the taxpayer’s Hawaii employee who is under the age of fifteen; or
(2) The cost paid or incurred by an employer who provides child care facilities at no charge to employees.
(c) The amount of the credit allowed by this section in any taxable year shall not exceed $ for contributions to a full-time qualified care plan, a part-time qualified care plan made on behalf of the employee’s dependents, or the costs of operating a child care facility with no charge to employees.
(d) For purposes of this section:
"Contributions" include employer reimbursements to employees for employees' qualified care plan expenses, or direct payments to child care programs or providers, or both.
"Employee" includes, for any year, an individual who is an employee within the meaning of Section 401(c)(1) of the Internal Revenue Code (relating to self-employed individuals).
"Full-time qualified care plan" means an average of eight or more hours of dependent care per day for at least forty-two weeks per year in a qualified care plan.
"Part-time qualified care plan" means an average of two to eight hours of dependent care per day for at least forty-two weeks per year in a qualified care plan.
"Qualified care plan" includes, but is not limited to, onsite service, center-based service, in-home care or home-provider care, and a dependent care center as defined by section 21(b)(2)(D) of the Internal Revenue Code which is a specialized center with respect to short-term illnesses of an employee’s dependents; provided the facility is located in this State and is operated under the authority of a license when required by state law.
"Specialized center" means a facility which provides care to mildly ill children and which may do any of the following:
(1) Be staffed by pediatric nurses and day care workers;
(2) Admit children suffering from common childhood ailments including colds, flu, and chickenpox;
(3) Make special arrangements for well children with minor problems associated with diabetes, asthma, breaks or sprains, and recuperation from surgery; or
(4) Separate children according to their illness and symptoms in order to protect them from cross-infection.
(e) In the case where an employer makes contributions to a qualified care plan and also collects fees from parents to support a child care facility owned and operated by the employer, no credit shall be allowed under this section for contributions in the amount, if any, by which the sum of the contributions and fees exceed the total cost of providing care.
(f) In the case where the child care received is less than forty-two weeks, the employer taxpayer shall claim a prorated portion of the allowable tax credit. The employer shall prorate the credit using the ratio of the number of weeks of care received divided by forty-two weeks.
(g) The tax credit shall not be available to an employer if the care provided on behalf of an employee is provided by an individual who:
(1) Qualifies as a dependent of that employee or that employee’s spouse; and
(2) Is a son, stepson, daughter, or stepdaughter of that employee under the age of 19 at the close of that taxable year.
(h) The contributions to a qualified care plan shall not discriminate in favor of employees who are officers, owners, or highly compensated, or their dependents.
(i) In the case where the credit is taken by an employer for contributions to a qualified care plan which is used at a facility owned by the employer, the basis of that facility shall be reduced by the amount of the credit. The basis adjustment shall be made for the taxable year for which the credit is allowed.
(j) With the exception of a husband and wife, if two or more taxpayers share in the costs eligible for the credit provided by this section, each taxpayer shall be eligible to receive a tax credit with respect to his, her, or its respective share of the costs paid or incurred. In the case of a husband and wife who file a separate return, the credit may be taken by either or equally divided between them.
(k) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(l) The director of taxation may:
(1) Adopt rules pursuant to chapter 91 to effectuate this section; and
(2) Require the taxpayer to furnish information to ascertain the validity for the claim for tax credits under this section."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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