[Revenews] Working Family Household and Dependent Care Credit

[CRIDGE Marcus * DOR]

Working Family Household and Dependent Care Credit

It has come to our attention that our instructions for completing Schedules OR-WFHDC and OR-WFHDC-NP are not providing the results intended in certain situations where the taxpayer has non-taxable dependent care benefits. When determining a taxpayer's eligibility for the Working Family Household and Dependent Care Credit (WFHDC), please refer to the instructions below.

Earned income:
Before completing Schedule OR-WFHDC (or Schedule OR-WFHDC-NP), taxpayers must first complete federal Form 2441, Child and Dependent Care Expenses. Taxpayers must do this whether or not they qualify for or claim the federal Child and Dependent Care (CDC) credit. The earned income reported on lines 4 and 5 of Form 2441 are transferred to lines 22 and 23 of Schedule OR-WFHDC. If taxpayers do not qualify for the federal credit because of their non-taxable dependent care benefits, use the earned income from lines 18 and 19 in Part III of Form 2441 to transfer to lines 22 and 23 of Schedule OR-WFHDC.

Qualifying expenses:
Qualifying expenses the taxpayer paid for care (Column (c), lines 7-15 of Schedule OR-WFHDC), must be paid by the taxpayer. This includes up to $5,000 ($2,500 if married filing separately) of pre-tax dependent care benefits described under IRC Section 129. These benefits should not be included in column (b) (the portion of expenses some else paid on their behalf).

Dependent care benefits include:

-          Amounts the employer paid directly to either the taxpayer or to the care provider for the care of the qualifying person(s) while the taxpayer worked,

-          The fair market value of care in a daycare facility provided or sponsored by the employer, and

-          Pre-tax contributions the taxpayer made under a dependent care flexible spending arrangement (FSA).



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