Beginning in tax year 2024, eligible Nebraska families may qualify for a refundable tax credit if they incur expenses for child daycare. Below are the key requirements and instructions for obtaining the credit:
Eligibility Requirements:
- Child Age Criteria: The child must be 5 years old or younger as of December 31, 2024, and enrolled in daycare.
- Household Income: Total household income (HHI) must not exceed $150,000. Household income is generally defined as federal adjusted gross income (AGI).
- For households with an HHI of $75,000 or less, the credit is $2,000 per child.
- For households with an HHI between $75,001 and $150,000, the credit is $1,000 per child.
Note: The household income threshold applies regardless of the taxpayer’s filing status (e.g., joint, single, etc.).
- Child Care Provider Requirements: The child must be enrolled in one of the following:
- A child care facility licensed under the Child Care Licensing Act,
- An approved license-exempt provider participating in the child care subsidy program,
- If household income is at or below 100% of the federal poverty level, the child may also qualify.
How to Claim the Tax Credit:
- Application Process: Parents must first apply for and reserve the credit prior to filing their 2024 Nebraska tax returns. To apply, complete Form 7203 through the Nebraska eDash program, which is the recommended method for filing. This process is simple and user-friendly.
- Notification: Upon successful submission of Form 7203, the Nebraska Department of Revenue will notify taxpayers of the acceptance of their application within 10 days via email.
Important Notes:
- Credit Limitation: The total amount of credits available for 2024 is limited to $15 million, and the credit is available on a first-come, first-served basis.
We highly recommend that taxpayers submit their application as soon as possible to secure the credit.
Action Steps:
If you believe you qualify for the Nebraska Child Care Tax Credit, please ensure you submit Form 7203 as early as possible. Should you need assistance or have any questions, please contact your Frankel tax professional.
